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Obama berates AIG and vows to try to block bonuses

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Good move by Obama.

The previous administration would likely have said nothing and did nothing while their pawns in the finance industry continued doing their bidding.

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In fact, the previous administration probably would have hired a top defence lawyer for to protect these AIG bonus payments......

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Cracks appear between Politicians and Businesses, a good sign, may bring good results for ordinary working poors.

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"All across the country there are people who work hard and meet their responsibilities every day, without the benefit of government bailouts"

And they're paying for people who don't.

"These people brought this on themselves. Now you're rewarding failure."

But rewarding failure is the cornerstone of Democrat policy.

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Just a question, am I right in saying that the taxpayers money AIG received was part of the payout made by Bush in 2008?

If so, they were obviously sleeping and forgot to attach strings.

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Sarge, most of of this would never have been necessary if it hadn't been for the ignorance and stupidity of the previous administration that you supported.

Trying to blame the Democrats shows just how little you know about the situation.

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archiebald - "If so, they were obviously sleeping and forgot to attach strings."

Funny thing is, the Republicans and their supporters barely raised a peep while in its dying hours, the Bush Administration gave away $270 billion with no strings attached.

They are obviously hoping the rest of us forget it real quick, so thanks for mentioning it.

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Sushi - Trying to blame the Republicans shows just how little you know about the situation. The Democrats blocked the Republicans' attempts to reform Fannie & Freddie.

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How do they justify it? Good question. But we might as well be honest about it. Payments that arise on account of contract are...well...contractual. Otherwise AIG might be able to stay afloat by cutting back on its claims payments.

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There should not have been a bailout in the first place. However, since the government volunteered to give them a huge bag of money, the company was able to stay in business and is therefore obligated to pay these huge bonuses due to contracts made with certain employees. It's no wonder that AIG needed a government bailout - they agreed to give out big bonuses whether or not the company succeeded or not. Obama voted for the bailout - right? Why didn't he think of this kind of thing before he voted for it. This is the kind of mess that occurs when government gets involved in the private sector. Now, what is Obama going to do - break a legal contract because it's politically embarrassing? Embarrassment is not grounds for violating a contract. If the company went out of business, then yeah - the contracts would have been voided. But since Obama and just about everyone else in Congress voted to save AIG from bankruptcy, the stupid contracts must be honored. Seriously folks, governments should let companies like this go out of business.

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Sarge, so you're saying the Republicans are not to blame for this fiscal disaster AND depression that unfolded on their watch?

Is that what you are saying?

Wolfpack - "There should not have been a bailout in the first place."

So, what do you suggest should have happened?

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Fanning the class war flames got Obama to where he is today.

If it weren't AIG someone else would be the target of his mentor Saul Alinsky's tactics - "freeze it, personalize it, and polarize it."

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Sez,

I agree. The company should honor their contracts.

I wonder, however, if it would have been possible for the govt. to say, "if you want the bailout money, let us look at your books and we'll put the money exactly where it is needed to keep your business afloat."

That way, the money would have gone where it was needed and AIG wouldn't have broken their contractual agreement to the CEOs.

Taka

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Wolfpack,

I don't know whether AIG should have gone out of business or not. It's a fairly large company and the failure of a large insurer with widespread reinsurance contracts has an impact that is largely incalculable. So, in financial terms we're spending--at any given time--a measured amount of money to avoid an unmeasurable risk.

If you were to say that the money we may have to spend in the future is also unmeasurable, that would be true. However, we can--at any given time--stop spending more money in an effort to avoid the risk. But we cannot stop the risk.

I don't mind the bonuses. I mind Obama's not telling the truth about the bonuses. He seems to me to be riding a populist bandwagon of outraged disapproval. It would be more honest for him to say that he didn't like the bonus payments but that contractual payments should be honored. What was good was Cuomo's action to investigate whether bonuses were being contractually awarded under legitimate bonus arrangements or not.

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There is no way in hell that the American tax payer has to bend over and take it up the rear for the AIG executives to get colossal bonus. The treasury department is the majority shareholder in AIG and should be able to make sure this offensive action does not happen.

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If people accused of being terrorists wanting to bring down the US can be held in Gitmo without charge why can’t these derivative traders also be sent there on the same grounds? Without “their” bonuses.

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Taka313,

I agree with you. I think there is a way for that to happen, but I think that the government wanted to avoid forcing the financials into bankruptcy and receivership.

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Sez,

And as I have stated before, I think AIG would be awfully smart to have a giant townhall meeting for employees, customers and shareholders of AIG and at the end of the meeting, after everyone had been given the opportunity to vent their grievances, they bring the CEOs on stage to present them with their bonus money....in pennies...if they choose to keep it (I'd tell them that their budget money prevented AIG from hiring security for the event wink - wink).

Taka

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This is a real two-edged sword. On one hand, Obama can pick up political points among the American heartland for preaching about the "evils of greed." Then again, considering the competitive and transient nature of financial institutions, the people getting bonuses might leave AIG for other companies if they don't get them. What would happen if AIG then went under for a lack of talented personnel. Obama would not sell well in middle America if AIG was put in the position of being unable to meet its obligations.

To put it bluntly, grandstanding is sometimes politically savvy ("Mission Accomplished" and all that. However, overextending yourself can come back and bite you in the bxtt.

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This is why the government should not be bailing out the private sector. We shouldn't even be in this position. Is the government now supposed to start running and setting wage policies for these private institutions? It would be better to let these institutions fail and restructure.

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The people that are expected to get bonuses generated good profit? If so, should they suffer due to the incompetence of others? Sounds like collective punishment. Collective punishment is popular?

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timborder, you saying the mgmt at AIG is good, competent?? ...........

I think from now on govts around the world are going to need to ensure these monster companies are simply not allowed to get so monstrous, then when they sink we just watch & carry on, time will tell if this lesson is learned

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I didn't make a generalized statement that "management was competent." What I said was that given the nature of financial institutions (and the industry in general), there is a very high level of fluidity in the manpower pool. Basically speaking, talent tends to go where the highest salaries are. As such, grandstanding on this issue (which makes good news copy, etc)., might be disingenious if it increases the level of instability within the organization (this is a very fine line to trend). Although the President seems to want to make an example of AIG (and those members of management who have acted in their own best interest rather than the interests of shareholders and the wider public), going too far might actually come back to haunt the President if through his zealotry the company were to fail.

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While Obama is jumping on AIG, you think he could talk more about the over paid government workers? They too don't deserve a lot of what they are getting. Did you guys hear about the Post Master? almost a million dollars a year....

Oh, and why did congress and the house give themselves a raise recently?

oh, if they are upset at AIG for living up to their contractual obligations, why don't they stop all funding and let AIG get sued, and mind you, you are hearing execs, but in reality a lot of it is commissions owed to banks and other companies, anyway, let them get sued and see what happens there. And then, I want all elected politicians to give back their raises, I want them to stop all spending on their offices, including sexy secretaries, stop all funds into their houses and most of all, stop paying for their kids......

sushi, you need to get off on who caused this economic problem.... you are very wrong. Do you still support Barney Frank and Dodd? Simply blaming one person or group out of a large organization that has more than one task at hand is a very childish way to settle an argument.

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American capitalism at work: a wonder to behold. This humungous Ponzi scheme is only not much different than the one the Soviets imposed on Russia. In the end the elites are taken care of by the sweat of the populous.

skipthesong Are you suggesting that all other problems have to be solved first before dealing with this wholesale theft of the treasury? And people wouldn't bring up Bush & Co so much if they would own up to their mistakes and their supports would stop making excuses on their behalf.

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They should have listened to Jefferson's warning: "I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."

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When money is taking away from people who would normally have no choice to spend it, to put it into the hands of those who just hoard it, then circulation slows down and the economy turns into what it is now.

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Jefferson was right. We have allowed corporations to bleed our power away and to replace it with their own. We have been complicit in this by our failure to demand regulation.

For the right wingers on this site. This unfolded on your watch. Have the backbone and guts to take responsiblity for deregulation that led to this crisis. Your party's denial is nothing less than blatant cowardess and evasion of the responsiblities you bear.

For the tax payer. Most of us live out our lives dreaming about $1million dollars. That amount would dramatically change the lives of most working people in most countries. But how many of you will ever see that kind of money without working 10-20 years to earn it? Very very few. Yet these execs are taking home many times that amount. And for what? For bleeding the planet dry? For dreaming up exotic financial products that even they knew were risky? For running rampant when left with less regulation? For raping and pillaging most of the planet to turn profits that never see their way back to the general public?

And now they are doing it with our tax dollars! Well enough. To hell with their contracts. If they took our tax money at $170+ billion and are then going to try to pay that out at bonuses then they have declared war on tax paying people.

If they can afford bonus payments, then they don't need our money. The company should support itself first before bleeding us dry to do so.

We need wage caps on any company taking any form of public money. Bonus freeze or cancellation for any company taking tax dollars. And prison sentences, VERY LONG ONES, for anyone misdirecting funds to excessive compensation as long as the company is in financial danger.

We need to regulate, control and manage these companies as servants of society. Not the other way around. Time to bring them in line.

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sabi / tkoind2

About Jefferson.......To bad he never said it.

http://www.snopes.com/quotes/jefferson/banks.asp

Buddah / tkoind2

And people wouldn't bring up Bush & Co so much if they would own up to their mistakes and their supports would stop making excuses on their behalf.

For the right wingers on this site. This unfolded on your watch. Have the backbone and guts to take responsiblity for deregulation that led to this crisis. Your party's denial is nothing less than blatant cowardess and evasion of the responsiblities you bear.

Funny, I seem to remember Congress has had a Democratic Majority now the past two years. I guess we can just forget that little part in taking responsibilty on your parties part also.

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One more thing. If you think the financial services industry didn't understand the risky nature of their products, think again. Derivatives, credid default swaps and mortgage backed securities all had inherent risks that companies understood. They just didn't want to see the problems as long as they were raking in profits.

The arrogance, short sightedness and greed of most banks, investment firms and corporations blinded them to the dangers. And they are still, even after all the fall they've been through, a collection of self important twits who care zero for the average worker and have no real loyalty to anything but profits.

I had hoped the fall would teach them lessons. And teach us to better regulate these monsters. But AIG's behavior demonstrates just how miguided these companies are.

Now we cannot let them fall because we depend upon them too. But if we rescue them, then they belong in part to us and had better start to behave with greater civic and social responsiblity. And I am not talking about a little philantropy here and there. I am talking about real responsibility for the nations they do business in. And real strong oversight and regulation by the government to keep them in line.

If you are naive enough to think business has your best interests in mind then I have a bridge for sale in NY you might want to buy. Wake up people. Corporations are sociopathic entities and a threat to our liberty and well being. We must control them or risk being controlled by them, as we very much are today.

Speak out and fight this AIG decision!!!!

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b4b:skipthesong Are you suggesting that all other problems have to be solved first before dealing with this wholesale theft of the treasury? And people wouldn't bring up Bush & Co so much if they would own up to their mistakes and their supports would stop making excuses on their behalf."

No, I am not saying that. I am griping and hollering too. There is plenty to blame Bush for, but solely blaming him and the repubs for this mess is not productive and it is completly wrong. Take a look at the real numbers, and look back over the past two years. Not until the dems took control did our stocks start flying downward. I've been hearing from these guys here on what's going to happen for the last two years and they have all been right. If you want to blame anyone, you blame who decided to enhance freddie and fannie.

I am also seeing a lot of hypocrisy. The economy is stable remarks gets McCain 90 posts on how stupid he is. Yet, you have Barney Frank saying the same thing at the same time and nothing and Franks holds more power over the finance sector than Bush and McCain combined. I am upset that they bailed out AIG and I am even more upset at GM. All this to save jobs... man, let the companies fail. If politicians are going to go out there, they need to clean up their house first in my mind otherwise its nothing more than political wind.

Now, I don't have a lot of time now, I'll try to touch up on this reply to you in the later afternoon if I can. Today, I am forced to sit next to a heavy smoker who reeks bad.

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The arrogance, short sightedness and greed of most banks, investment firms and corporations blinded them to the dangers." Well, what did you expect from a bank? Its not like its there money to be giving ou - it ours. Now, only if the government was stingy.

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Very funny comparing the posters on yesterday's "Outrage grows over millions in AIG bonuses" story and today's "Obama berates AIG and vows to try to block bonuses" story. I'll give skipthesong and a couple others credit as they show up on both, but otherwise I see lots of people seemed to have either gotten worked up over AIG for the first time in the last 24 hours, or was there something in the today's article's title that got people excited? Hmmm...

Anyways, what AIG was doing in their Financial Products division was fraud, and likely the biggest fraud in history. They were selling insurance on an event that if it happened, they wouldn't be able to pay out. And they knew it too. Surprise, surprise, US house prices did drop, but they get to keep their money and you guys get to hold the bag. And some people here want to pay them their bonuses too, cause they were nice enough to stick around and fulfill their contracts and not quit. Hey, nice work if you can get it, as they say.

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I think Obama should personally line up the AIG board and punch them out one by one.

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timborder

not trying to be a smarta$$ but I think it is haunting us right about now & has been for a while, greed at the top has gotten way out of hand ever since the 80s till today, its patently obvious the free market doesnt work to correct itself continuosly over time the greedy just got more & more greedy & today is the result & the fatcats have the golden parachutes.

again this isnt all pointed at you or yr posts just typing away here.

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It is easier to rob by setting up a bank than by holding up a bank clerk. Bertold Brecht

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So GW, what is the solution? I also agree that Gordon Gecko's mantra of "greed is good" has gotten seriously out of hand in recent times. However, surely in the land of the free any comments regarding government intervention would be hard to swallow? Moreover, it is very difficult to seperate out policy-necessity from political skull-duggery. Today it is the financial services industry that is giving the President grief. What about tomorrow? In a country that has traditionally been anti-interventionist in a whole range of areas, are there sufficient checks and balances (both legal and moral) to ensure that the politicians (on both sides) don't go overboard?

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Pretty rich coming from an administration full of tax cheats and with a Treasury that is still basically without a plan.

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sailwind,

That quote might indeed be a paraphrasing of his statements. Here is quote from Jefferson that is certainly authentic, and very related to the current situation. "And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale." There are many statements made by prominent people warning us of the current mess.

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And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale."

Jefferson sure was a 'pay as you go' type of guy. Didn't believe in borrowing from future generations to pay for the current Government. Obama sure could use a lesson here on that one.

By the way McCain pretty much nailed the jist of Jefferson's feelings when he called Obama's plan for the economy, 'Generational Theft'.

AIG should be cut off of all bail-out money now. Let em fold and sell off what ever assets they have left to who ever wants to buy it. Because even with the money we keep pouring into this firm and if by some miracle it does become solvent again..........Is anyone in their right mind going to business with them again? I sure wouldn't. We haven't 'bailed them out' we have just postponed the inevitable (the consumer will see to that, I promise) of this company's demise and wasted billions of tax dollars doing it and that we will never see again, as long as we allow this firm to continue to operate under its current management.

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“This isn’t just a matter of dollars and cents. It’s about our fundamental values.”

Just words. Just speeches.

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This is what happens when the federal government tries and run private businesses. Obama's never even owned a lemonade stand. This is waaaay above his pay grade.

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MMMM I love it.

AIG screws America.

Democrats complain about AIG.

Republicans conmplain about Obama.

Rush Limbaugh is so proud of these republicans. < :-)

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What would happen if AIG then went under for a lack of talented personnel.

This remark deserves an award. The personnel's talent had a big hand in destroying the economy of a nation.

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"This is what happens when the federal government tries and run private businesses. Obama's never even owned a lemonade stand. This is waaaay above his pay grade."

It's quite funny to watch people who are angry about all the spending and bonuses and what not struggle to find a way to get angry at Obama about him being AGAINST these huge bonuses! I mean look at sarge's comments:

"And they're paying for people who don't. These people brought this on themselves. Now you're rewarding failure. But rewarding failure is the cornerstone of Democrat policy."

Yesterday the guy's pretending to be angry that tax dollars are going towards the big bonuses at AIG, and now that Obama vows to do what he can to stop the bonuses, instead of being thankful he tries to find a way to blame it all on Obama. I would say it's bizarre behaviour, but considering whom he and others like him still defend, it's not unexpected at all... just funny, and perhaps a little sad.

And Aggie again: "Just words. Just speeches."

Not when it's followed by him doing what he can to stop the bonuses, it's not. Nice try, though.

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Obama, can't do anything about AIG folks. Get with the program. A president can't do much to a market other than talk about it.

Even McCain said something to the effect that it is absurd that a guy gets a golden parachute, then talking about home depot, while others are losing their jobs... but he would only talk too.

What Obama does have though over Bush and others, except for Regan (I was too young during the Regan years so I really can't speak too much, and so were most of you here) is the media is in his hands. He can bring the issue out into the public which can be a good thing, but if they go through and give them any more money, and including GM, then he has failed.

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Obama’s comments came on the same day a new poll showed slippage in his approval rating. The poll by the Pew Research Center showed it dropped from 64% in February to 59%

Herein lies the real reason behind his comments. One should remind Pres. Obama, Pelosi, Frank, Reid and others that they approved the Bill that gave them the money, without any oversight. They gave the money away, and they were allowed to do with it whatever they wanted (true it is bad form for them to do so, but not illegal).

So I guess all of those complaining now could be said to "Be for it before they were against it." (to borrow a phrase from the past election cycle).

Funny how when the Reps. and Bush were in charge, many of the same people who voted this bill in were against Bush for rushing into Iraq without due caution (and they were justified to do so), but now they are rushing in to spend money like "druken sailors in Thailand" without any caution, and this is what you get.

Going after AIG is just some "low hangin fruit" that Obama can use to deflect the fact that the bill was rushed through and he voted for it. A measure to let the sond bite driven American media and populace know that he is doing something about this.

Though I don't approve of the actions by AIG, it is in their right. Contracts signed with executives stipulate the bonuses. So if AIG doesn't pay them, then they have the right to sue AIG, and if they win, could get the bonus plus any other "pain and suffering" plus court costs.

I don't really think that the Government wants to really go through with making them not pay the bonuses. Since if they are going to be allowed to "breach their contracts" then there is nothing to stop the government to breach all o the union contracts with the automakers and make them renegotiate them. They did it with United Airlines when many pilots I know lost their pensions and had to settle with lesser amounts when they went through bankruptcy, and I guess the present administration doesn't want to loose the union vote in the next election.

So, they will make noise, but nothing will happen. Just a measure to give us masses our "circuses and bread."

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'Going after AIG is just some "low hangin fruit"'

Again, this is funny to watch.

Obama: "I'm against this... it is not just dollars and cents, it is about morality, etc."

Righties: "Words, just words!"

Obama commits to fighting it and the 'just words' becomes, "Well... it's just low-hanging fruit!".

Excuses, excuses... whatever you can do to stay angry at a guy who's helping you out. It must really be frustrating for Republicans when Obama goes through with his promises and helps them out, and even when he does what they accuse him of NOT doing the day before.

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Isn't it refreshing to have a President who is more concerned with the people than the giant companies? I for one am so bloody happy that McCain did not win. Imagine having another President who does not know or does not care about the economy?

Take these financial companies to task and get them under control is what I say.

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Obama commits to fighting it and the 'just words' becomes, "Well... it's just low-hanging fruit!".

Some fighter

Later, White House spokesman Robert Gibbs said the administration would modify the terms of a pending $30 billion bailout installment for AIG to at least recoup the $165 million the bonuses represent. That wouldn’t rescind the bonuses, just require AIG to account for them differently.

I guess he will just call the a 'cost of living raise' from now on to make it more palatable and hide it after all.

Lipstick on a pig but he sure talks pretty when he's 'angry'.

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timorborder

just as you mentioned in yr post, clearly the time has come for more oversight, especially legal, and moral, there clearly isnt enough of either yet

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Brilliant. Real leadership from our activist president. Apparently still in campaign mode (does he know any other?) he just can't stop with the class war b.s. he has to endlessly engage in to impress the far Left now controlling his party. Demonize these AIG people before they can do their jobs.

"Senior managers submitted their resignations. Some employees didn't show up at all."

"It's a mob effect," one senior executive said. "It's putting people's lives in danger."

"...But company officials contend that the uproar is scaring away the very employees who understand AIG Financial Products' complex trades and who are trying to dismantle the division before it further endangers the world's economy. "It's going to blow up," said a senior Financial Products manager, who spoke on condition of anonymity because he was not authorized to speak for the company. "I have a horrible, horrible, horrible feeling that this is going to end badly."

http://www.washingtonpost.com/wp-dyn/content/article/2009/03/16/AR2009031602961.html

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AIG executives receive $165 million bonuses after government put billions of dollars bailout on AIG to recover its finance system. This is really ridiculous and wasting money of taxpayers. I just can't believe it.

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I am being told by two of them who just walked in the door today, that much of these bonuses were for commissions!

Even if a company is losing money and I still bring in sales, I would expect my commission.

can anyone find the actual clauses for the bonuses?

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"the far Left now controlling his party. Demonize these AIG people before they can do their jobs"

Heh, "demonize"?

I'm tempted to as "what are you rabbiting about now", but then, as a die-hard bush supporter I can understand your need to defend heavily rewarding failure bonuses.

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Apparently still in campaign mode (does he know any other?) he just can't stop with the class war b.s. he has to endlessly engage in to impress the far Left now controlling his party. Demonize these AIG people before they can do their jobs.

That is seriously the funniest thing I have ever read on Japan Today. "These AIG people" engaged in the biggest fraud in human history, have cost the American taxpayer hundreds of billions of dollars, and may have singlehandedly destroyed the American economy. They are clowns and criminals. Now they are, as it was put in the WSJ, trying to "loot the corpse", because a guy named Paulson didn't think to put conditions on the money before he handed it over. Who did that Paulson guy work for again??? And your worried about the poor people being so "demonized" by that big bad Obama guy that they can't do their jobs. Hahaha, they actually have done their jobs very well, they took you to the cleaners.

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I'm not worried about people at AIG being demonized the way Obama demonized Rush Limbaugh. If they are guilty they are guilty. I'm worried we have a president who can't pass up the chance to fan the class war fires, even when it will impede solving big problems which have ramifications far, far beyond the narrow concerns of the tax cheats and thugs in his cabinet/re-election committee.

From the article:"It's a mob effect," one senior executive said. "It's putting people's lives in danger."

Taxpayers, like it or not, now basically own a large percentage of this corrupt operation.

How does burning it down or scaring off those who hold the keys and know the secrets (and if guilty will probably gladly sing, I would think) benefit ordinary Americans?

Again, Obama is not instilling confidence. This is not leadership. Stoking the fires here is just stupid.

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GJDailleuit Paulson, if you ever met him outside the political areana, you'd find a somewhat nice guy. He may have been brought in under Bush, but like Bloomberg, he is/was more dem than repub. You should not only look at what party they represent, but see how and why they join one party or another; Arnold, Bloomberg, Corzine, etc.... Not to mention, did you get to notice when Paulson was brought on? 2006.... and mostly by who????

You are going the wrong route llike many here.

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This is not leadership." Can you recall, in your life time, when the US had good leadership?

Its just not there any more

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Obama does angry with a smile. But how else can he play this. He is after all the cheerleader for the very same team that gave us this financial crises. The mega-wealthy who are bent on maintaining their grip on their ability to make increasing profits and through that their power.

Obama's ride as the messiah that will bring an end to the financial crises and show us the way back to economic recovery has been immensely successful. But it can't continue for long. Pretty soon the reality of who and what he really represents will become unmistakable most.

Obama and the team (I mean those he represents) must be feeling more than a little fearful of what might result from this blow up over bonuses. AIG is anything but a one off. It is the norm! There have been recently announced the huge bonus payouts to CEOs by Citigroup ($10.82 mill), America Corp ($9.96 mill), and in both cases following double digit billion dollar bailouts paid by the US taxpayers. You just have to know this is only what gets out into the news! There will have been many more such payouts.

What is happening is a massive injection of wealth - from Americans, the working class predominantly - to the already fantastically wealthy. This is a transfer of wealth away from those who most need it.

If that doesn't startle you then here's something for you to chew on. On Sunday AIG released a long list of payouts it made with the taxpayers' money. The WSJ calculated that ""roughly two-thirds" of the nearly $180 billion in government aid AIG received has been transferred to its trading partners, most of them banks and investment companies. At the top of the list was Goldman Sachs, getting $12.9 billion. AIG essentially paid these firms 100 percent on irresponsible investments."

Here's another interesting bit of information in no small way related to the rest. The bailout plan that has served AIG so well was put together by Obama's treasury secretary, Henry Paulson, the former Goldman Sachs chairman! He also had the help of NY Fed reserve bank president Timothy Geithner. The bonuses have been defended by one Edward Liddy, formerly of Goldman Sachs board of directors who was actually installed as the CEP of AIG by...the government. [source of above quote --- http://www.wsws.org/articles/2009/mar2009/pers-m17.shtml]

So, yeah. You could imagine how this story hitting the front pages of Joe and Jane America's newspaper might really make Obama annoyed. He's doing a good job looking annoyed. He has to.

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Yeah, Obama is going a bit too far with this. What's he going to do? He can't break contracts. My guess is that he's trying to capitalize on public sympathy and when the time is right he's going to tell everyone there's not much he can do and that will be the end of it. I shot my mouth off about the bonuses but I didn't say the company had any way around them. He shouldn't have come out with stronger statements.

Anyway, AIG can't really fail. They're basically the bailout for a lot of other banks. You can be angry at them but having Goldman Sachs, Societe Generale, Deutsche Bank, Barclays, and Bank of America go under because you're mad at AIG doesn't make a lot of sense. Consider the AIG bailout to be a distribution point for other bailouts for other banks.

It's a crappy situation, but the alternative is worse.

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It's a crappy situation, but the alternative is worse." You are probably right, but still, why not get prepared for it anyway?

Really, you don't think we could survive, in 2009?

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taniwha: "Here's another interesting bit of information in no small way related to the rest. The bailout plan that has served AIG so well was put together by Obama's treasury secretary, Henry Paulson, the former Goldman Sachs chairman!"

Quick question... who brought in Paulson? Hint: it was the guy before Obama, and the guy who brought on this crisis. Thus your entire argument goes down in flames.

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Quick question... who brought in Paulson? Hint: it was the guy before Obama, and the guy who brought on this crisis. Thus your entire argument goes down in flames."

Not really smith, take a look, non-wiki profiles on Paulson. And no, I am not playing a my team is better than your team. I am however trying to say the whole game is screwed.

Paulson could have easily been a dem. Timing was more the thing than anything. Still, he's not a bad guy. He's come to Tokyo a few times in the past.

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Hey smith: Since you still insist putting the entire blame on Bush, here's what another countrywoman of yours said: http://sigmundcarlandalfred.wordpress.com/2008/09/16/the-left%E2%80%99s-crony-capitalism-exposed-fannie-mae-and-freddie-mac-implosion-a-dem-creation/

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Superlib - "You can be angry at them but having Goldman Sachs, Societe Generale, Deutsche Bank, Barclays, and Bank of America go under because you're mad at AIG doesn't make a lot of sense. "

Maybe I'm being dumb here - but why will not honouring the bonuses make the bank(s) go under?

If there hadn't been a bailout there wouldn't be AIG - so I presume in that case there would have benn forced to forfait a lot more than a bonus.

I agree in a time of diaster these payments are sickening, especially when the banks are part of the reason we're all in this mucking fuddle.

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I agree in a time of diaster these payments are sickening, especially when the banks are part of the reason we're all in this mucking fuddle." Yes, but you need to remember, I lot of their problems were caused by banking regulations, forced loans, etc...

I not saying leave a sector totally out in the wind, but I believe too much governance has helped cause the problem. Now, the gov is getting into it much too deeply for me to feel comfortable.

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These bonuses aren't a waste of money. These executives are going to spend it, buying luxury items and hiring maids and cooks and gardeners, thus spurring the economy!

"Americans' bailout blues"

I think BB King should release a song titled "Bailout Blues."

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Why not print lot and lots of new money and pay all the bonuses in cash, 5 dollar bills for example. This could be done at a public event to honour the recipients (name & shame might be a better title) on national television. They could also be given the option of refusing the money publicly to show what good Americans they are.

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sailwind said:

AIG should be cut off of all bail-out money now. Let em fold and sell off what ever assets they have left to who ever wants to buy it

The financial market would crash and burn if AIG were allowed to fail. Shows you what you know. They are the insurer of trillions of dollars of bonds, securities and other assets. The financial institutions would tumble like dominoes. The confidence of investors relies on certain assets held by other financial institutions to be insured. Take away the insurance right now and we go into a depression.

Talk is cheap when you have no idea what you are talking about.

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This is too much:

Iowa Sen. Charles Grassley suggested that AIG executives should take a Japanese approach toward accepting responsibility for the collapse of the insurance giant by resigning or killing themselves.

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Maybe I'm being dumb here - but why will not honouring the bonuses make the bank(s) go under?

Well I was talking about the fact that AIG can't be allowed to fail. They would bring down other companies with them so the collateral damage would be massive. It wasn't really related to the bonus system.

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Many of those receiving bonuses deserve their bonus. Because a company fails does not mean that some employees did not make a large sum of money for the corporation. In other words an employee gets a base pay and incentives. I got that when I worked labor in a steel mill. In this case the incentives are held until the end of the year. It was still incentives that were promised by contract. It was the success of some of these employees that kept the corporation from further decline. It would be equivalent to a real estate agent that was on salary (I don't think that happens) and sells a house and the firm says you are not entitled to your commission because we needed a loan to bail us out. Many of the employees receiving their bonus deserved their bonus.

I know I am not presenting a popular view. Oh well, it is an honest one. If and when any of the readers of these threads on JT become successful they would want to be treated fairly and not just told they make enough money so they don't need to get the full amount of money they earned. If their company was failing they would still want the earnings that had been agreed upon by contract. Again most of these bonuses at the lower echelons are simply incentives they earned.

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This is not leadership. Stoking the fires here is just stupid.

If Charles Grassley represents the Republican alternative, well 'nuff said.

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goodDonkey: "The financial market would crash and burn if AIG were allowed to fail"

AIG is too big to fail, is that it? Just like GM, right?

So smaller, successful, responsible companies have to prop up bigger, unsuccessful irresponsible companies, is that it?

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Because a company fails does not mean that some employees did not make a large sum of money for the corporation. In other words an employee gets a base pay and incentives."

there you go!

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The NYT's thinks the "bonus issue" is a distraction from more troubling revelations:

Which brings us to the second disclosure of recent days. It was common knowledge that most of the A.I.G. bailout money had been funneled to the company’s trading partners — banks and other financial firms that would have lost big if A.I.G. were allowed to fail. On Sunday, after much prodding by Congress and the public, A.I.G. finally released the partners’ identities, along with amounts paid thus far to make them whole.

The largest single recipient was Goldman Sachs ($12.9 billion). The amount — hardly chump change even by Wall Street standards — appears to contradict earlier assertions by Goldman that its exposure to risk from A.I.G. was “not material” and that its positions were offset by collateral or hedges. If so, why didn’t the hedges pay up instead of the American taxpayers?

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Sarge

You obviously did not read or did not understand my post. Do you understand just how many financial assets are insured by AIG? Are you trying to tell us that you don't care if we go into a depression as long as you get your pound of flesh?

Just like GM, right?

I never said it was like GM. GM would not send us into a depression, the dissolution of AIG would. Why don't you take the time to tell us what AIG does and why you think they could fail and not cause a depression? Why don't you explain to us why you think it is that when all of the sudden massive assets on the financial market are suddenly uninsured how the investors confidence will not be shaken? Why don't you tell us who can now take on these insurance responsibilities without a government loan? I know better than you that AIG was irresponsible; they held way to many credit default swaps. Perhaps you can explain credit default swaps to us. Then explain AIG's derivative exposure and how that effected their position financially.

I will make it easy on you Sarge. You said, "have to prop up bigger, unsuccessful irresponsible companies[;]" please explain to us what AIG did that was irresponsible. Come on Sarge, tell us what you don't know.

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This is all Obama's fault.

Barack Obama deregulated the stockmarket.

Barack Obama gave the president who started funnelling money to the big losers.

I want to get this right, by the republicans this is Obama's fault.

Barack Obama put together the legislation to allow derivitives to be used instead of stocks backs by money.

Barack Obama put together the initial $700Billion bailout without direction on useage.

I can tell it's all Obama's fault.

None of this was the republicans fault. < :-)

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The financial market would crash and burn if AIG were allowed to fail. Shows you what you know. They are the insurer of trillions of dollars of bonds, securities and other assets.

Educate me...... They insured with what? Their private gold vault?

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Let em fail... State Farm and Blue Cross seem to being doing just fine. I think they might over take over AIG after the fire sale and do a heck of a better job then Uncle sam and his bail-out.

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AIG should have nationalized, had toxic debt taken on by the government and then all the healthy assets should have been sold back into the market place to highest bidder. AIG as whole has been unable to run their business properly, letting AIG fail doesn't the companies asset would suddenly disappear and I am there are other companies better suited to do what AIG does.

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AIG should have nationalized, had toxic debt taken on by the government and then all the healthy assets should have been sold back into the market place to highest bidder. AIG as whole has been unable to run their business properly, letting AIG fail doesn't the companies asset would suddenly disappear and I am there are other companies better suited to do what AIG does.

BINGO

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Some good laughs here. The NY Times is also circling the drain. Quoting them on this or any other serious matter with political ramifications is a bit like asking Bernie Madoff if he knows of a safe haven for your cashola.

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I should proof read my posts;

I am sure there are other companies better suited to do what AIG does.

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So if AIG is too big to fail in the estimation of the government and Wall Street did their executives think they could go for a handout without oversite? The workers at AIG who lost their jobs must be especially thrilled about these bonuses. I say remove all the executives who had anything to do with the credit default swap debacle and try again.

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The idea that AIG is "too big to fail" might be getting worn out. Everybody now knows that AIG is going to fail if the government doesn't prop it up. Hopefully the financial geniuses have made moves to CYA if AIG does tank. In that case let it go, the AIG execs will get exactly what they deserve then.

In the meantime one has to ponder what the SEC thought they were doing while any one company was getting "too big to fail." If there is a lesson here it is that the regulators should keep the lid on this kind of "growth." Of course since the regulators are former Wall St. "geniuses" we know how much they are going to regulate their friends.

The whole system is bankrupt, ethically as well as financially.

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sailwind said:

Let em fail...

He does not care if this country falls into a depression as long as he gets his pound of flesh.

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State Farm and Blue Cross seem to being doing just fine

Oh do they insure financial institutions assets?

The question is not how deep is AIG's exposure to toxic assets. The question is how deep is the rest of the financial industry's exposure to AIG? Correct me if I am wrong. The financial markets are so intertwined and their reliance to AIG is so deep that we will devastate the stock market to a level that it cannot recover from for at least one decade. Unemployment will rise to levels twice what it is today. Many financial institutions will fail and America will lose much of the financial sector to the rest of the world. For a few hundred billion dollars we will lose trillions of dollars if AIG is allowed to fail. But hey, sailwind can answer any questions you have about what it is that AIG insures.

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It is abundantly clear to me that some of the posters on this thread would have said "Let the stock market fail; something else will come along to take it's place" in 1929.

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I have to agree with adaydream and the Republicans - this economic meltdown, and - indeed - pretty much every lax finace industry regulation that was cooked up over the last 8 years is all President Obama's fault.

Why? It's primarily because he was a community organizer from the South Side of Chicago who uses a teleprompter and who purportedly has links to many people that make Republicans uncomfortable. :-)

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Oh do they insure financial institutions assets?

Citigroup has posted recently profits and they do insure financial institutions.

The question is not how deep is AIG's exposure to toxic assets. The question is how deep is the rest of the financial industry's exposure to AIG?

The two are interrelated, a lot of AIG's exposure to toxic asset comes from the smaller banks(and their toxic assets) that they insure. There is no reason that the Government couldn't have used the "few" hundred billion dollars, to take over the toxic assets from AIG, instead of giving them unrestricted cash.

The financial markets are so intertwined and their reliance to AIG is so deep that we will devastate the stock market to a level that it cannot recover from for at least one decade.

If AIG and it's assets were to disappear it would devastate the stock market but AIG' assets are not going to disappear, if the assets(including bank insurance) are profitable assets, somebody will buy them. There are other profitable American companies that could handle AIG's bank insurance business. It's not a question of foreign buyers, the government can easily restrict who purchases AIG's assets to American Companies.

Small banks/institutions would not disappear because their insurance policies would be held by government(If the government took over AIG's toxic assets).

It is abundantly clear to me that some of the posters on this thread would have said "Let the stock market fail; something else will come along to take it's place"

As opposed to throwing money in the centre of a hungry hungry hippo game and hoping that it will solve the problem.

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There is no reason that the Government couldn't have used the "few" hundred billion dollars, to take over the toxic assets from AIG, instead of giving them unrestricted cash.

I agree. I believe they did it that way because the market has expressed fear of any nationalization process. As soon as the U.S. government became an investor, deep, in financial institutions we kind of lost the unfettered free market doctrine so investors need to get over semantics and realize that bail out money should be used as responsibly as possible.

If AIG and it's assets were to disappear it would devastate the stock market but AIG' assets are not going to disappear, if the assets(including bank insurance) are profitable assets, somebody will buy them

Investor confidence would not withstand the turmoil of a lapse in insurance. The majority of Lehman Brothers assets disappeared. What was sold off went off to pay some of the creditors. A Japanese firm (as reported here on JT) purchased a huge proportion of assets dirt cheap. America lost a chunk of the industry when Lehman Brothers went down that it will never recover. It also was the catalyst for the failing of other financial institutions. The instability was so frightful that Paulson, a lifelong freetrader, resorted to socialism to stabilize the market. He should have done it earlier and not let Lehman Brothers go. When the herd of investors gets spooked it can be very dangerous. If AIG failed around the time Lehman Brothers failed the market would have gone into freefall. Confidence is the pavement in good times and ice in bad times. Nobody worries about a huge crack in the pavement but a huge crack in the ice will send people scattering very quickly.

It is very easy to talk about why people should not lose their confidence but there was no need to have the run on the banks in 1929. It was the run on the banks itself that partially destroyed the system or at the very least buried it. Our markets were very shaky last Autumn. I am hardly an alarmist by nature. You will not the nature of an alarmist in my many posts. But I learn the lessons of history. And just because many people did not understand what took place last Autumn it does not mean that it was not majorly significant to history, our present and our future.

the government can easily restrict who purchases AIG's assets to American Companies.

That would be a huge mistake in my opinion. Right now restrictions tend to be for national security reasons including assets such as airlines at times. I don't want another country saying we can't buy their bank or financial institution and I would not want to restrict them.

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I believe they did it that way because the market has expressed fear of any nationalization process.

I think market in case could be read as, people who might not have been given their big bonuses.

The instability was so frightful that Paulson, a lifelong freetrader, resorted to socialism to stabilize the market.

Socaialism and nationalization(temporary) are two apples on same the branch.

The majority of Lehman Brothers assets disappeared. What was sold off went off to pay some of the creditors.

Had the government been assumed Lehman Brothers toxic assets, then Lehman Brothers could have been sold for a lot more. Assets - Toxic Assets = 0, Assets only = $. A more profitable return on the investment might have attracted American buyers to purchase the assets.

That would be a huge mistake in my opinion. Right now restrictions tend to be for national security reasons including assets such as airlines at times.

As well as enegry reserves; CNOOC - Unocal. If a country block the sales of engery reserves, it is not that far fetched to block the sale of financial reserves.

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I don't see why Obama is all upset about these bonuses. I mean he's known about them for awhile, and hell, his own Treasury Secretary is the one who helped arrange them. So, I mean why the outrage? Ah, politics, and its ever fragrant smell.

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I see that with the exception of Good Donkey, pretty much all other posters have about zero understanding of the situation, and some of them, like Molenir above, don't care that they don't understand and are just making stuff up.

And the question from sailwind "Educate me...... They insured with what? Their private gold vault?". C'mon, you mean you don't know the answer??? Nothing. They insured the US housing market with NOTHING, cause they thought a real estate price drop would never happen so they would never have to pay. Kind of like your life insurance company assuming you're immortal. And as it turns out, they don't have to pay, they're leaving that to Uncle Sam while they relax on a nice tropical beach.

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And the question from sailwind "Educate me...... They insured with what? Their private gold vault?". C'mon, you mean you don't know the answer??? Nothing.

I've always known the answer and that you've made it clear also.

This company deserved a Bail-out? How much more tax dollars are we going to waste on this outfit?

Gooddonkey,

Typical Democratic response to any problem, throw more money at it, that'll do her and you actually approve.

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smithinjapan taniwha: "Here's another interesting bit of information in no small way related to the rest. The bailout plan that has served AIG so well was put together by Obama's treasury secretary, Henry Paulson, the former Goldman Sachs chairman!" Quick question... who brought in Paulson? Hint: it was the guy before Obama, and the guy who brought on this crisis. Thus your entire argument goes down in flames.

Well, if you don't bother reading the post you are not going to get the argument, are you? I described Obama as the cheerleader for the very same team that gave us this financial crises. The mega-wealthy who are bent on maintaining their grip on their ability to make increasing profits and through that their power. Inotherwords, Obama represents the very same interests as did his predecessor, President George W Bush and for that matter President Bill Clinton, all of them, all the way back, at least as far back as Roosevelt.

It is interesting to compare what Obama is doing with what Roosevelt did, many columnists are doing that now, particularly as the Recession begins to conform much closer to THAT depression. However, now the economic fundamentals are such that this cannot be fruitfully compared to the Great Depression. Why? Because those fundamentals have been completely laid waste to by the policies enacted over decades of Washington administrations. So forget George Bush junior. GW was nothing more and nothing less than a product of the system, The same system that has given us B. Obama. Although, it does seem that Obama, in terms of eloquence, poise, and obvious intellect, is far preferable as a leader to George Bush junior.

The whole point of my argument is this. Obama represents the most fraudulent and criminal aspects of Wall Street, that is those interests that got the world into this SEEMINGLY sudden slow train crash - that is the inevitable depression the entire globe is descending into. As such, it is Obama's first job to ensure that the illusion of democracy/ governance for the people remains in place WHILE the real thin layer of America's most wealthy continue their profit making, AND set in place the policies and structures that will ensure the continuity of their positions of power/their class. That is it. That is all their is to Obama that is relevant to the population at large at this moment.

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GJDailleult - I see that with the exception of Good Donkey, pretty much all other posters have about zero understanding of the situation, and some of them, like Molenir above, don't care that they don't understand and are just making stuff up.

What did I make up? Geitner is the Treasury secretary. As aid to former Treasury secretary, he was the point man in the AIG bailout. He was the one who was primarily involved from the Treasury department in writing up the bailout package. So he knew about, and agreed to these bonuses last year. It can therefore be presumed that as he is Obama's Treasury secretary, that Obama by extension knew about this and has known for some time. These are the facts. So, what did I make up? The fact that Obama's supposed outrage comes right when the bonuses are being paid? I say again, if he has known about this for awhile, and evidence clearly suggests he did, then all this outrage is merely politics as usual.

As to the bonuses themselves thats a different topic entirely.

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Ridiculous posturing. Those bonuses are microscopic compared to the huge amount of government spending and pork in the "stimulus" bill that had to be pushed through in one day.

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