Wall Street's Cultural Cancer
There is something really sick about much of the commentary around the AIG Bonus payments of $170 million to retain a group of traders that managed to lose $65 Billion in the last three months of 2008. Here's Andrew Ross Sorkin of the New York Times.
A.I.G. employees concocted complex derivatives that then wormed their way through the global financial system. If they leave -- the buzz on Wall Street is that some have, and more are ready to -- they might simply turn around and trade against A.I.G.'s book. Why not? They know how bad it is. They built it.
It is obvious that Sorkin, who writes the Dealbook column for the Times and spends his every waking hour trying to glean gossip from investment bankers and traders, has absorbed the Darwinist norms of Wall Street. Maybe like Ron Insana, now returned sheepishly to CNBC, Sorkin sees himself as a Big Swinging D**k. What's crazy is that Sorkin's explanation seems to be the one that Hank Paulson, a former BSD himself, must have believed in allowing the retention payments in the first place. After all, here is the gang that couldn't shoot straight--a historically incompetent group of traders--asking for record amounts of money to stay with the firm they brought down. WTF?
Could there be any other explanation for Paulson agreeing to these payments than some crude form of blackmail to keep these guys (and girls?) from going to some Hedge Fund with inside info to trade against the government's (we now owned 80% of AIG) book? Of course what is more disturbing is that no one at the New York Fed managed to inform their former boss, Geithner that the bonus payments were coming due until two days before they were to be paid. Once again, the cultural norms of Wall Street have spread like a cancer throughout the regulatory system of this country.
Will also be interesting how Obama/Biden handle what looks like another disastrous Israel government with a fascist Prime Minister and Foreign Minister. Just wait 'til one or the other makes a visit to Washington, esp. this Lieberman guy. Another example of how Israel has poisoned itself by adhering to ultra-right politics.
March 17, 2009 10:23 AM | Reply | Permalink
If you want to see what a major-league asshole Sorkin is, just watch a replay of Chris Matthews' Sunday show for March 15.
This dude thinks he's a Master of the Universe. He seems to revel in the fact that these jerks who allow him to suck their cocks can bring the economy to a halt seemingly at will.
March 17, 2009 10:27 AM | Reply | Permalink
They're too big to fail. They're too big to lose. They're too big to underpay. They're too big to refuse. They're just too darn big. Hey... maybe they're just hyperinflated bubbles. Let's get a pin and find out.
March 17, 2009 10:59 AM | Reply | Permalink
The bonuses are bad, boneheaded and they sap the political support that Obama will need to see us through the remaining economic crisis months (I'm hoping it's months) but the problem is -- we never should have bailed out AIG to begin with.
Let's cut our losses and refuse them the $30 billion we promised. Let it go under. If other central banks in Europe and around the world want to step up to protect counterparties like SocGen, they can. I say we let the counterparties go to. The world doesn't actually need Goldman Sachs.
March 17, 2009 11:28 AM | Reply | Permalink
I'm coming around to agreeing with you, Destor. We've picked at the corner of this bandaid long enough. Maybe it's time to rip it off, and see what happens.
Hold onto your hat, though.
-- ARG
March 17, 2009 12:25 PM | Reply | Permalink
Oh dare to dream... No Goldman Sachs. Music to my ears.
March 17, 2009 11:15 PM | Reply | Permalink
Further proof that capitalism is a (serially) failed system.
March 17, 2009 1:27 PM | Reply | Permalink
Not sure about that. A crash every 80 years? The Soviet Union didn't even last 75.
March 17, 2009 3:30 PM | Reply | Permalink
Dr Dick is right. Capitalism as we know it is a huge failure. How is it that the banks got to be 'too big to fail'? Europe has anti-monopoly laws in place. It's time to start over. Get rid of the gigantic banks and bookstores that have their tentacles in each city and town in the country. Capitalism is just fine and dandy if everyone is honest. I prefer to live in reality.
March 23, 2009 10:29 PM | Reply | Permalink
Jon Taplin says:
I disagree that they were incompetent, I think they accomplished what they set out to do, make millions for themselves regardless of what happened to the company they worked for. Think ENRON.
And the word "mistakes" is the new word to describe outright theft of millions, as in "Mistakes were made...". A common criminal commits crimes, a thieving banker makes "mistakes." Chris Cox who headed the SEC and allowed Wall Street to run wild
admitted to "making mistakes."
The Bush gang made "mistakes" in the Iraq war.
Many people called Bush stupid, a bumbler, incompetent. Well, Bush was neither, he knew exactly what he was doing, he just didn't care about the consequences being suffered by people outside his social class as he pushed his ideology.
The language is being manipulated to ameliorate the responsibility of the 5% as they force the other 95% of the public to eat the shit they're being fed. George Orwell is alive and well.
March 17, 2009 1:35 PM | Reply | Permalink
Nice post. Yes, I was one of those people who believed that the Iraq occupation made a lot of people a lot of money from Halliburton to Monsanto.
Naomi Klein, of course, has a whole chapter on Iraq as a perfect example of disaster capitalism.
The Shock Doctrine has now finally come home to the place it was invented. The Chicago Boys are still very much in charge. Until the Friedman/Rubin gang are driven from the temple, we are in for more pain.
March 18, 2009 11:12 AM | Reply | Permalink
The part I don't get, is why you folks are so fixated on bonuses, that were OK'd by Congress? If you have a problem with that talk to Dodd.
Meanwhile billions have gone to Goldman Saks. More billions to overseas banks. From where I sit you're counting pennies while real money goes out he back door. Focus people, focus.
March 17, 2009 2:48 PM | Reply | Permalink
shooter,
are you suggesting no one here complains about the big picture, about the big money?
March 17, 2009 3:59 PM | Reply | Permalink
Oh my, here's a link to the Dodd actions and the not so amazing discovery that AIG contributed mostly to Democrats with over $100k each to Dodd and Obama. http://www.foxbusiness.com/story/markets/industries/finance/dodd-cracks-aig---time/
One can always count on Democrats keeping corruption personal. I wonder how long it will take to find out the bailouts are barter for campaign contributions from Dem Wall St. fatcats.
March 17, 2009 3:03 PM | Reply | Permalink
shooter,
how did those contributions go when the Republicans had control of both Houses and the White House?
March 17, 2009 4:01 PM | Reply | Permalink
Okay, I'm with you on that. The government is using AIG as a conduit to recapitalize foreign banks and that's just wrong. When these banks bought the credit default swaps they were knowingly exposing them to the risk of AIG's insolvency even as they were insulating themselves from the risks of other insolvencies. If those banks need recapitalizations, the central banks in Europe should foot the bill.
March 17, 2009 5:02 PM | Reply | Permalink
Foreign banks?
Take a look at the list of the Fed's primary dealers, the banks without which the Fed can't execute monetary policy.
Notice a few "foreign banks" on the list?
March 17, 2009 10:25 PM | Reply | Permalink
Although why anyone should care about SocGen is beyond me.
March 17, 2009 10:26 PM | Reply | Permalink
Tea Party - Please mark your Calendars
A tea party, what a wonderful idea, I just wish it had been mine. I have a feeling that USPS is going to have a lot of tea to contend with, after all it only costs 42 cents to send a message, hopefully heard round the world!!!
So please mark your Calendars
There's a storm abrewin'. What happens when good, responsible people keep quiet?
Washington has forgotten they work for us. We don't work for them. Throwing good money after bad is NOT the answer.
I am sick of the midnight, closed door sessions to come up with a plan. I am sick of Congress raking CEO's over the coals while they, themselves, have defaulted on their taxes.
I am sick of the bailed out companies having lavish vacations and retreats on my dollar. I am sick of being told it is MY responsibility to rescue people that, knowingly, bought more house than they could afford. I am sick of being made to feel it is my patriotic duty to pay MORE taxes.
I, like all of you, am a responsible citizen. I pay my taxes. I live on a budget and I don't ask someone else to carry the burden for poor decisions I may make. I have emailed my congressmen and senators asking them to NOT vote for the stimulus package as it was written without reading it first. No one listened. They voted for it, pork and all.
O..K. folks, here it is. You may think you are just one voice and what you think won't make a difference. Well, yes it will and YES, WE CAN!!
If you are disgusted and angry with the way Washington is handling our taxes. If you are fearful of the fallout from the reckless spending of BILLIONS to bailout and "stimulate" without accountability and responsibility then we need to become ONE, LOUD VOICE THAT CAN BE HEARD FROM EVERY CITY, TOWN, SUBURB AND HOME IN AMERICA.
There is a growing protest to demand that Congress, the President and his cabinet LISTEN to us, the American Citizens. What is being done in Washington is NOT the way to handle the economic free fall.
So, here's the plan. On April 1, 2009, all Americans are asked to send a TEABAG to Washington , D.C. You do not have to enclose a note or any other information unless you so desire. Just a TEABAG.
Many cities are organizing protests. If you simply search, "New American Tea Party", several sites will come up. If you aren't the 'protester' type, simply make your one voice heard with a TEABAG. Your one voice will become a roar when joined with millions of others that feel the same way. Yes, something needs to be done but the lack of confidence as shown by the steady decline in the stock market speaks volumes.
This was not my idea. I visited the sites of the 'New American Tea Party' and an online survey showed over 90% of thousands said they would send the teabag on April 1. Why, April 1?? We want them to reach Washington by April 15. Will you do it? I will. Send it to; 1600 Pennsylvania Ave. Washington , D.C. 20500 ..
Visit the website below for more information about the 'New American Tea Party'. I would encourage everyone to go ahead and get the envelope ready to mail, then just drop it in the mail April 1.
Can't guarantee what the postage will be by then, it is going up as we speak, but have your envelope ready. What will this cost you? A little time and a 40 something cent stamp.
What could you receive in benefits? Maybe, just maybe, our elected officials will start to listen to the people. Take out the Pork. Tell us how the money is being spent. We want TRANSPARENCY AND ACCOUNTABILITY. Remember, the money will be spent over the next 4-5 years. It is not too late.
Of course, if you agree with the way things are being done now, just delete this e-mail !!!!!
http://newamericanteaparty.com/tea-party-listsubmission/
March 17, 2009 4:21 PM | Reply | Permalink
Oh, good god. You must have pasted the entire email in here not knowing it's a hoax.
The New American Tea Party is NOT advocating sending to tea bags to the White House or anywhere else.
The New American Tea Party is a coalition of right wing-nut groups, including the infamous Grover Norquist's Americans for Tax Reform, Freedom Works, the Heartland Institute and Coalition for a Conservative Majority.
March 17, 2009 7:41 PM | Reply | Permalink