Thursday, March 19, 2009
The Bonus Nonsense
Stupid is as stupid does.
This whole thing with AIG and the retention bonuses is just so much crap. Congress fucks up the security laws that have guided this country for better than half a century and now they are upset about less than $200 million in retention bonuses. As Bill Clinton would say, “give me a break.”
After listening to the CEO of AIG in front of a committee of Congress yesterday, it was easy for me to understand why these bonuses were paid and how they related to the bigger picture of security positions that added up into the trillions of dollars. Congress getting all worked up about less than $200 million when the CEO is trying to work out AIG’s position in some very complicated swaps, with the help of certain key employees, is ridiculous to my way of thinking. But, whoever said Congress does or understands the smart way through a problem.
Let us say you are on the operating table having open heart surgery and on a heart lung machine. Would you want the hospital to pay the heart surgeon a retention bonus to finish the operation and close you up, or, would you like the hospital to fire the surgeon and risk your life because they may not be able to get another skilled heart surgeon in the operating room in time to finish your operation? That is pretty much what the CEO of AIG described to the committee of Congress yesterday.
When a trader or portfolio manager is working on a position that must be hedged every night before they go home, AIG can not afford to switch horses in mid stream. Liddy, the CEO of AIG, made the right decision when you consider he was paying out less than $200 million to protect a position that had a value of more than a trillion dollars. Only our Congress would berate a man, who came out of retirement and was willing to work for ONE DOLLAR a year, through such shit.
The level of understanding of the financial industry in the 21st century by our Congress is abysmal. God help us all if these clowns can not get up to speed on this shit. If they truly understand this stuff, but are acting like clowns to squeeze the last ounce of drama out of this, then I think we are not any better off. If these jokers will wrap themselves in the flag, why would they not take advantage of the bonus nonsense to make some noise?