The Greed Continues at AIG
Mar 15, 2009
Posted by Jody Eisenman | Filed under Uncategorized
Which statement below is true about AIG?
1. They reported the largest single quarterly loss in US corporate history
2. They are the recipient of at least $170 billion from the taxpayers via a bailout
3. While begging for funds, they sent their employees on a deluxe resort vacation
4. While losing unheard of sums of capital, they are planning to pay their valued employees bonuses of $165 million today.
The answer is, all of the above. AIG is essentially 2 companies: a very profitable insurance firm, and a high risk hedge fund that gambles huge amounts of dollars in order to make pennies. The high risk arm of AIG has issued all these credit default swaps which brought the company relatively small premiums at the risk of potentially bankruptcy sized losses. Without the taxpayers, they would be bankrupt right now. Now, why the government does not insist on splitting the 2 units and winding down the CDS arm is beyond me. However, the bonuses AIG is planning to pay is not going to the employees of the profitable insurance arm; it’s going to the guys who managed to blow billions! CEO Liddy claims that these are binding contracts. Gee, I thought bonuses were for people who contributed to a company’s profits. Don’t you think AIG would be better off without these people and their losses? Welcome to the new era of finance. Naturally, Tim Geithner is not thrilled. Lawrence Summers, Obama’s top economic advisor, called this plan “outrageous”. I can think of a few other words as well.
Meanwhile, the stock market continued its’ advance as I expected. For the week, the Dow closed up almost 600 points, and the S & P added over 70 points. However, we are now getting close to our first area of resistance. If the market continues to climb, I would expect the moment of truth to happen sometime this week. The market was led by (surprise) the financials, which had an incredible weak. MS was up almost 50% for the week. WFC was up about 60%, and C was up over 75% for the week. I would expect profit taking to occur soon, but their were certainly a lot more smiles on CNBC this past week.
March 16th, 2009 at 8:11 am
AIG = Allowing Irreversible Greed.
AIG = All in Greed.
AIG = Arn’t I Greedy.
AIG = A$#holes, in general.
This is sick. Why in the world are we helping these companies that keep sending millions to people who do not know how to run a company? They cry yet get paid millions on the “average joes” taxes. Furthermore, I fear this is just the tip of the iceberg. Look what Enterprise rent-a-car did to get bailout funds:
http://www.butasforme.com/2009/02/25/alert-enterprise-rent-a-car-may-have-fired-employees-as-fake-evidence-when-lobbing-for-bailout-money/
Not to make excuses for these people, but the bailouts are making crooks out of everyone that touches the money.
March 16th, 2009 at 9:07 pm
Obama says he is opposed to the bonus money. Lets see what happens. Either way, the money being used to bail all these entities out is becoming astronomical. Until recently, the oversite of these funds has been severely lacking.