Tuesday, March 17, 2009

Never Mind the AIG Bonuses: We May Have "Redistributive Change" on an International Scale

I wrote about the obscene practical joke played on American taxpayers by American International Group yesterday. Two more observations -

A Simple Apology and Resignation Would be Sufficient

An Iowa politico made a modest proposal, regarding how AIG executives might deal with the regrettable embarrassment they face.

"...Republican Sen. Charles Grassley of Iowa didn't appear to be joking, however, when he spoke with Cedar Rapids, Iowa, radio station WMT.

" 'I would suggest the first thing that would make me feel a little better toward them [AIG executives] is if they follow the Japanese example and come before the American people and take that deep bow and say, "I am sorry," and then either do one of two things: resign or go commit suicide,' he said.

" 'And in the case of the Japanese, they usually commit suicide.' " (CNN)

I cannot, as a practicing Catholic, suggest that anyone commit suicide. With that proviso, however, I think that Senator Grassley's suggestion has merit.

I think it would be decent of those AIG executives who ran their company into the ground, and rewarded themselves with taxpayer's money, to reimburse the federal government for money wasted on their bonuses. But, an apology and resignation would be sufficient. Providing that they do no more harm to America or the world.

AIG, The Washington Crowd, and, Maybe, Redistributive Change

I don't think that The Wall Street Journal could reasonably be called a scandal sheet. That's why I was a bit disturbed to read this:

"...The politicians also prefer to talk about AIG's latest bonus payments because they deflect attention from Washington's failure to supervise AIG. The Beltway crowd has been selling the story that AIG failed because it operated in a shadowy unregulated world and cleverly exploited gaps among Washington overseers. Said President Obama yesterday, 'This is a corporation that finds itself in financial distress due to recklessness and greed.' That's true, but Washington doesn't want you to know that various arms of government approved, enabled and encouraged AIG's disastrous bet on the U.S. housing market....." (WSJ) (emphasis mine)

And, now that the federal government owns 80% of AIG, I'm very concerned about what money funneled through that company will be used for: and who it will go to.

I suggest, strongly, reading that Wall Street Journal article ("The Real AIG Outrage" (March 17, 2009)). Apparently, "...The U.S. government is now in the business of distributing foreign aid to offshore financiers, laundered through a once-great American company...."

Coming from another source, I might be more skeptical. Reading about what might be the start of "redistributive change" on an international scale - in The Wall Street Journal - I think there's some reason for concern: or at least a high level of interest.

American Money Going Overseas Can Make Sense - But This Looks Sneaky

I think that there are times when it's good policy to send tax dollars overseas: either directly or indirectly. Looking through my Another War-on-Terror Blog should give you an idea of my view of the world, and America's place in it. I'm no isolationist.

However, it looks like there may be something very sneaky going on with the feds and AIG. And, given Obama's views on redistributive change and related topics, I'm very concerned about the federal government quietly acquiring a massive interest in AIG, and the amount of money that's being channeled (the WSJ author wrote "laundered") through AIG.

I sincerely hope there's a nice, reasonable - and acceptable - explanation.

Related posts: News and views:


Change Your Life for Better said...

I don't understand why this issue about bonuses catches so much attention when it is not the worth of the bailout of package amount.

So where does the channeled money go through AIG and why do they do it? May be your view on America's place explains it.

Brian, aka Nanoc, aka Norski said...

Change Your Life for Better,

I think I understand what you mean by "...it is not the worth of the bailout of package amount."

In another post I point out that the bonuses were about 1 cent of each dollar going to AIG: a small, but not quite insignificant amount.

Why the fuss? It makes no sense at all to reward people for undesirable behavior (A little more at "AIG, Outrage, Corporations, Unions, and Common Sense " (March 16, 2009)).

As for where the money goes after it leaves AIG - the article I cited (and linked to) gives very little information. I'd recommend reading that Wall Street Journal op-ed piece - just follow the link in this blog.

I sincerely hope that the WSJ author's concern is unfounded. And, it may be. On the other hand, we may have a serious problem - which is why I wrote this post. I wanted to draw attention to the WSJ article.

As for why AIG and the federal government have been acting as they have - I've no idea.

What concerned me most was the very quiet way that the federal government has acquired a controlling interest in a major financial firm. And, the distinct possibility that this firm may be - again very quietly - be giving money to unspecified persons and organizations.

It's not that American money is going overseas that troubles me - it's the very, very quiet way it's being done.

I hope this answers your question.

About 'my view of America's place' - Traditionally, the American government has not owned companies.

Also, there are procedures for giving federal funds to persons and organizations. These procedures may not have been followed in the AIG bailout.

That is disturbing to me. There are supposed to be 'checks and balances' in American government that keep any one part of the system from becoming too powerful.

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