This is An Awesome Post

by jhwygirl

Subject: AIG

Some of the best:

AIG is not equipped to be able to balance the ethical considerations involved in paying huge executive bonuses. Although a “person” under the law, there’s no person called AIG who can undertake this type of a priori moralizing. Paying the bonuses was the only way this corporate “person” could get a sound night’s sleep. It could rest assured that it was satisfying its marching orders, its prime directive. It’s really a simple “life,” being a corporation-person. No complicated morality issues, no fear of death by natural causes, but certainly a fear of death by dissolution, or bankruptcy. Every part of those articles of incorporation and bylaws are designed to avoid this type of death. And it’s avoided by making shareholders happy, by maximizing profits. The only consideration running through the corporation’s “mind” is how can “I” do these things?

Over at Left in the West.


  1. Lizard

    yes, thanks j-girl. it’s a good post, and you and JC had good comments. but i have a quick question: when will Democrats start calling on Obama to fire his economic team? the ruse continues with Obama’s blessing, and the shiny veneer is starting to dull, but there’s still this reluctance to concede Obama is making a HUGE mistake by letting the wolves continue to oversee the national chicken coop. maybe there’s a sense that criticizing Obama plays into Republican positions. that shouldn’t stop folks concerned with the direction of this country to voice those concerns.

    no more personhood for corporations sounds great, really progressive, and therefore impossible with the current batch of sycophants in DC.

    Then there’s Obama’s new Afghanistan strategy, which is just another looming disaster for this country. when will democrats wake up?

  2. Lizard

    There’s a good article from Atlantic Monthly. here’s a snippet:

    In its depth and suddenness, the U.S. economic and financial crisis is shockingly reminiscent of moments we have recently seen in emerging markets (and only in emerging markets): South Korea (1997), Malaysia (1998), Russia and Argentina (time and again). In each of those cases, global investors, afraid that the country or its financial sector wouldn’t be able to pay off mountainous debt, suddenly stopped lending. And in each case, that fear became self-fulfilling, as banks that couldn’t roll over their debt did, in fact, become unable to pay. This is precisely what drove Lehman Brothers into bankruptcy on September 15, causing all sources of funding to the U.S. financial sector to dry up overnight. Just as in emerging-market crises, the weakness in the banking system has quickly rippled out into the rest of the economy, causing a severe economic contraction and hardship for millions of people.

    But there’s a deeper and more disturbing similarity: elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.

  3. i believe that obama is more of a politician than many like to give him credit for ( or vilify him for) he is in tune with the great majority of americans who do not like to see radical moves on the part of a president. he is leading america away from the greedheads and the warmongers but in small incremental degrees. this is a huge ship and if you were to come too hard to starboard more people would object than if you led them gently and gradually there, which might cause a backlash on his policies.

    i hate to say it but the best analogy is sheepherding. if you have ever tried to herd a flock of sheep gradually where you want them to go, you must be very patient and not get them overly excited or alarmed or they will stampede the wrong direction. i think president obama is doing an excellent job of gently leading this country away from the cliff, but any sudden moves could send them to their collective deaths. so we must use a little patience.

    it is excruciating i know. i too, would prefer that the troops come home immediately and that we provide universal health coverage for everyone immediately and that we take over the banks and institute immediate control over wall street but the fact that the only real opposition that appears to be screaming at him seems to come from the polar opposites of the political spectrum. this gives me some hope that obama is on the right track and that slowly but surely we are going to come out of this. there is less vilification from the left than the right so that is a good sign that at least the gradual trend is due left, which is where we need to go.

    • Lizard

      pbear, i’ve been pouring over a variety of assessments trying to figure out how fucked we are going to be if Geithner is allowed to keep shoveling our future wealth to his buddies, and it’s looking pretty abysmal. this latest public/private boondoggle is just another obscene scam that could be stopped, but the sentiment you echo of “hush, naysayers, it takes time…” is just enabling the theft. and that’s what it is, plain and simple.

      let me put it another way: if a woman came to you saying her husband has been beating her and the kids, would you tell her to just be patient, because eventually her spouse will realize he has a problem and seek help, or would you tell her to get the hell out of the situation, and if her life is being threatened, then she has the right to defend herself by any means necessary, even if that means shooting the bastard?

  4. that is a crazy analogy liz.

  5. Lizard

    maybe bad taste, but not crazy. think about it. our relationship to our government as citizens is being exploited by the behavior of cash-drunk power-hungry gambling addicts; domestic abuse at a massive scale, and apologists for the president are increasingly sounding like codependent enablers, preaching patience while the beatings keep coming.

  6. Ayn Rand

    I know this isn’t germane to this post, but I am practically apoplectic. Jim Sadler, one of the good guys ( conservative) on the school board has just won re-election to the school board. So much for the attempt of the lefty loosies on this site to find a wing nut to run against him.

  7. JAYoung

    Since the Supreme Court believes corporations enjoy the freedoms of personhood, do they not also bear the responsibilities borne by other citizens?
    In this national emergency, I suggest we draft the boards of directors of all the failed financial institutions, all firms involved in health care, the energy companies… and have them all go to boot camp and then follow the lawful orders of a military commander.
    Of course some corporate bigwigs will protest that their companies are not U.S. citizens because the majority of their company’s stockholders are foreign nationals.
    And therein lies the false argument for unregulated corporate free speech.

  8. J. Ashe

    Given that the entire economic situation was created by the Republican “let the market sort it out”, deregulation and defective regulation, and “trickle down economics”, I cannot believe the Republicans have any criticism of the AIG bonuses. Aren’t these bonuses sort of “pay” for work poorly performed? If so, why not raise the pay to GM, Bear Sterns, and Lehman Bros. executives? Certainly if we pay them enough, it will “trickle down” to the rest of us.

    As an alternitive, why don’t we give a bonuses to the clerical workers and janitors at AIG and let it “trickle up” to senior management.

    • Lizard

      J. Ashe: Given that the entire economic situation was created by the Republican…

      NO, it was not created entirely by Republicans. Christ! this willful ignorance drives me crazy.

      GLASS-STEAGALL WAS SIGNED INTO LAW BY BILL CLINTON.

      why? because the financial sector paid for it. very simple.

    • Lizard

      problembear has a point, so i apologize.

  9. might want to reduce the crazy meds just a tad there liz…i don’t think J. Ashe deserved such a rude response. i kind of liked the fresh perspective on AIG bonuses to everyone on the bottom. republicans did in fact control congress during clinton’s tenure and while clinton was much too amiable toward wall street financiers the drum beat of the republican party during the past 28 years was to deregulate everything- let the markets rule….too many democrats bought into it along with, i might add usually the majority of american electorate (with the exception of the stolen 2000 election) but doubtful if gore would have been much better than clinton in wall street regard anyway. for sure, any of them would have handled everything better than bush. i despise politics but felt angry enough about bush to get active late in life. to say that clinton caused this would ignore the incredible negligence and unbelievable incompetance of george w bush and his entire administration. i don’t think you mean to give them a pass in your extremely impolite response to J. Ashe. at least i hope you don’t. otherwise i will need to do some serious evaluation of your agenda here….

    • Lizard

      marginalize my clearly stated opinions by questioning my mental state? nice.

      i’m sure J. can respond directly to me if i’ve been unduly rude. we’re all adults here, right?

      besides, you’ve been known to go all growly on plenty of folks, so please spare me the disingenuous lecturing.

      i’m just trying to drive home this strange concept that neither side of the isle gets a free pass when it comes to the economic malaise that’s stricken the entire global economy.

      if that’s crazy, then i better get medicated, or maybe i should try smoking the HOPIUM that’s all the rage these days.

      maybe, if i smoked HOPIUM, i could believe the bullshit reasoning we’re escalating the AfPak “theatre”–’cause the terrorists in the caves are still trying to kill us, right? instead of more plausible reasons, like pipelines and geopolitical positioning.

      i apologize if i upset or depress anyone, that’s not my intention. i’ll try to find more tactful ways of phrasing my contentious opinions, i promise.

      but be warned: my promise is only as good as a politicians’.

  10. i come down with full force on folks who deserve it liz, not innocent bystanders like J. Ashe. your response was over the top to someone who leans left. if the agenda is to draw folks to change the status quo then it behooves the speaker to at least welcome potential supporters rather than toss arrogant and spite-filled, ego driven grenades at them.

    if the agenda is to disrupt a fairly left leaning blog with constant nihilistic and vituperative verbal artillery which tends to drive away those who might support us then i think you are most effective and i question it.

    my suspicions about your motives expand in direct relation to the vehemence of your comments. just sayin’….

    • Lizard

      sorry, i didn’t realize there was a left-leaning code i’m suppose to adhere to when commenting.

    • Lizard

      and if that’s the case, maybe posting guidelines would be helpful. for an independent you seem to champion an unhealthy level of conformity.

  11. Lizard

    Mike Whitney–

    So why aren’t we seeing the Obama administration and the Fed going after the banking giants that have been co-conspirators with AIG in wreaking havoc with the US and the global economy by creating dodgy structured financial instruments that allowed banks and other financial companies to make huge off-balance-sheet bets that virtually guaranteed a future collapse?

    Good question, but not one that the House Finance Committee was asking.

    Instead of doing the obvious—which would be to use the Fed’s and theFederal Deposit Insurance Corporation’s powers to take over failed banking institutions, break them up, and sell the healthy parts off to stronger institutions—Geithner, Bernanke and the Obama financial team have been pouring dollars into a group of zombie banks that are already technically insolvent by any honest accounting standards, and that have no chance of standing on their own. They are borrowing money at such a prodigious rate that the Chinese government, America’s major creditor, and the United Nations, are talking about the need to do away with the dollar as the global currency, to be replaced by some basket of currencies, and in the process virtually assuring that the US currency will shrink dramatically in value, They are putting a colossal debt upon future generations of Americans. And they are putting at risk all the progressive goals that voters sent Obama to Washington expecting him to enact: health care reform, energy reform, education reform, etc.

  12. klemz

    Lizard, I support your freedom to sort that shit out. That was a rational response to naivety, imho.

  13. Lizard

    this article looks at the destructive tendencies of globalized capitalism.

    Labor was no longer a social or economic “partner” in manufacturing
    industry and business, which meant a human collaborator. Labor
    became simply a “cost,” to be reduced so far as possible, or to be
    eliminated.

    This was rationalized with two contestable euphemisms. The first
    was that a progressive process had been set in motion by which the
    profits of globalization would “trickle down” so as to benefit the
    entire work force.

    This is unimaginable if labor is a commodity of unlimited supply –
    as it tends to be today, and which is a specific characteristic of
    globalization. The power was destroyed which labor had possessed
    when industry was forced to hire from a given pool of workers in a
    given location.

    In addition, the tendency of globalization is to exploit a given
    workforce until it no longer has a margin of survival (Ricardo’s
    “iron law of wages”), and then move on. See rust-belt industry and
    trailer-home former towns

    The second of the three self-destroying (indeed suicidal) qualities
    of globalization has proved to be the inner dynamism driving it to
    expand by means of the division, subdivision, and quasi-
    universalization of the distribution of risk until this process had
    broken through the barrier of professional dissimulation. This means
    that the risk has been rendered unaccountable for, because
    effectively unidentifiable —- which had been the unconscious or
    unavowed purpose of the process.

    This is what has happened in international finance, where the
    accepted and normal framework of exchange between risk and
    responsibility that is inherent in capitalism has become
    indecipherable. Neither banks, the international financial
    institutions, nor governments – and certainly not investors – are
    capable of assigning value to certain tradable paper or commodities –
    so that economic exchange comes to a halt. Today we stand on the
    brink of that fatality.

    The third suicidal quality of globalized capitalism has been its
    creation of an organization of greed and individual acquisition and
    power which, because of the internationalization of the global
    economic system, has become not only unconscionable but
    unassessable. There is no assessable value in it. Thus the
    literally irrational pursuit of objectively meaningless rewards by
    some of those captains of finance now on the way to jail.

    Welcome to the newest version of internationalized capitalism: the
    suicide version. It now is on display in Washington and other
    parliamentary and judicial inquiries and tribunals, with consequences
    which we and our children will now live with.

  14. Lizard

    and finally, here is Pepe Escobar talking about Obama being held hostage by the PPPIP (public private partnership investment program)

    what happens at the G20 summit will be critical to how the world moves forward. alternatives to the dollar as the global reserve currency will be discussed. this is a dangerous situation being made worse by Geithner’s cronyism and Obama’s reluctance to stand up to the people who helped him wage a successful, half billion dollar campaign for the presidency.

    he won that campaign with soaring rhetoric about hope and change. now is his chance to show he’s not just another duplicitous politician beholden to the out-of-control banksters gambling away our future.

    • JC

      Lizard, take a look at this article, “The Quiet Coup” in The Atlantic by Simon Johnson. Johnson is a former chief economist t the IMF, and has a great sideline view of global economic markets, and positions our current economic crisis in context.

      A few lowlights:

      “But for the past 25 years or so, finance has boomed, becoming ever more powerful. The boom began with the Reagan years, and it only gained strength with the deregulatory policies of the Clinton and George W. Bush administrations. Several other factors helped fuel the financial industry’s ascent…

      these developments vastly increased the profit opportunities in financial services…

      Not surprisingly, Wall Street ran with these opportunities. From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits… This decade, it reached 41 percent.

      Pay rose just as dramatically. From 1948 to 1982, average compensation in the financial sector ranged between 99 percent and 108 percent of the average for all domestic private industries. From 1983, it shot upward, reaching 181 percent in 2007…

      The great wealth that the financial sector created and concentrated gave bankers enormous political weight—a weight not seen in the U.S. since the era of J.P. Morgan (the man).

      In short, when the finance industry moves to a point where it captures 41% of all domestic corporate profits, our economic system becomes vulnerable to collapse,which it has. Johnson lays out the reasoning why, unless the oligarchs are forced to cough up much of their riches, and we get strong restructuring and regulation, the economy will keep heading south.

      Great reading for an understanding of how national economies boom and bust in the global market, and how powerful oligarchs and political forces rise and fall together.

      • Lizard

        thanks JC–that was the first link i posted.

        the problem is there is now enough good analysis out there that to say Obama doesn’t know what needs to happen simply doesn’t work anymore. he knows, and he’s not doing it, and his economic team is prolonging and worsening the situation. it makes me sick. all the good work people do locally and in the state and across this country won’t matter if Obama refuses to turn off the corporate vacuum and address the Federal Reserve’s unique, opaque relationship with the govt.

        for me, disappointment over the many terrible appointments is beginning to turn into panic. it’s going to be very difficult to break the O-spell because a lot of people are deeply invested in hoping there would be some positive action backing up the rhetoric, but when it comes to the two most important areas–the economy and foreign policy–we’re being treated with a rebranding of Bush’s policy.

        i’ve been catching all kinds of hell for my “nihilistic” cynicism, as evident by pbear’s responses, but if a “left-leaning” blog like this isn’t an appropriate venue to voice these concerns, then where am i suppose to go? is what i am saying in this little thread really that crazy?

        • JC

          I’d say some people may not dig the tone. I like the gist of your ideas, not far from my own.

          Look, I like to get snarky as much as the next guy. But it doesn’t always get people to listen to your ideas, when they have to get past the attitude. Me, if it isn’t directed at me, or mean right wing tripe, I usually let it roll.

          I think pbear likes to keep his cave all snug in a rug sometimes. It’s spring time you know. Bears get grouchy until they’ve been out and about a bit. ;-)

          • Lizard

            i get it, style trumps content. and i’m not part of the in-crowd here, so i understand the paranoia about my “agenda.”

            j-girl recently expressed (and i’m paraphrasing) that this blog is about issues, not party politics.

            but there is a fair amount of sniping and snarking along party lines that goes on here, which is too bad because that combative divisiveness is a tremendous energy sink that people keep pouring themselves into, trolls and bloggers alike.

            i almost think it would have been better if McCain won the presidency. what’s happening would still be happening, but it would be easier to rally opposition.

            there have been and will be major protests around the world leading up to the G20 summit. will we be in the streets any time soon? doubtful. why? why aren’t we more pissed off?

          • JC

            No, I wouldn’t say style trumps content. But the tone about how we talk about issues makes a difference.

            I’m as guilty as any for taking ideological pokes at people, but it isn’t necessarily party oriented.

            As to protests, I think that you’ll start to see more and more of it as people sort out who Obama the campaigner was, and Obama the prez is. If the issue is important enough to stand up for, it shouldn’t matter who the figure head is. I’ve spent plenty of time in my life protesting democrats. Going to do some more…

  15. Lizard

    Ian Welsh:

    But, of course, the economic and financial crisis unfolding right now was not random. This crisis was predicted by multiple people, and it was predicted because of policy steps taken by government and widely-known private actions.

    We could all read the charts showing a bubble in housing prices and sales. We could all see that derivatives were also in a bubble. We knew that leverage was out of control, ballooning to 30X or in many cases even higher numbers. We knew that with financial deregulation firms had started being involved in multiple types of businesses, putting retail banks at risk from their insurance or brokerage or investment banking arms. We all knew that the US savings rate had hit unsustainable lows and that the trade deficit was too high. We knew that the carry trade was introducing tons of hot money to the system (borrowing for nothing in Japan and using that money for leveraged plays elsewhere).

    And, perhaps most importantly, we should have known that executives in the financial sector paying themselves huge bonuses were concentrating on short term gains and did not care about long term viability of their companies or even care about the honesty of what they were doing, because hey, by the time it all fell apart, they’d be rich, rich, rich and never need to work again.

    All of which is to say the crisis was caused by a number of factors. It was not random. It was predictable and predicted. If we just muddle through this current meltdown—spend a lot of money bailing out the banks, throw some stimulus around—and don’t fix the fundamentally-flawed incentives and structures of the system, it will likely happen again.

  16. Lizard

    Real News Network interviewing Noam Chomsky about the economy. he says some interesting things about labor, unions, wages, and Obama’s symbolic appearance recently at a Caterpillar plant to appeal to the working class. Caterpillar machines are currently helping Israel reek destruction in the occupied territories, and is a company that, during Reagan’s reign, brought in scabs to bust a strike. thanks, prez.




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