Posted on 03/17/2009 5:57:31 PM PDT by tobyhill
Cue the outrage. For months, the Obama administration and members of Congress have known that insurance giant AIG was getting ready to pay huge bonuses while living off government bailouts. It wasn't until the money was flowing and news was trickling out to the public that official Washington rose up in anger and vowed to yank the money back.
Why the sudden furor, just weeks after Barack Obama's team paid out $30 billion in additional aid to the company? So far, the administration has been unable to match its actions to Obama's tough rhetoric on executive compensation. And Congress has been unable or unwilling to restrict bonuses for bailout recipients, despite some lawmakers' repeated efforts to do so.
The situation has the White House and Treasury Secretary Timothy Geithner on the defensive. The administration was caught off guard Tuesday trying to explain why Geithner had waited until last Wednesday to call AIG chief executive Edward M. Liddy and demand that the bonus payments be restructured.
Neither Obama nor Geithner learned of the impending bonus payments until last week, senior administration officials told The Associated Press late Tuesday, speaking on condition of anonymity about internal discussions.
(Excerpt) Read more at google.com ...
Google the 2005 Congressional hearings on derivatives. Greenspan and SEC admitted that the market was so complex and intricate that they did not totally understood it. Experts also testified that the liabilities built up over the 20 years is massive that they do not know the true amounts. They estimated 55 trillion to 1.5 quadrillion, but they really do not know, but they do know that the US and the world combined could not print enough currency (we would run out of currency paper and ink) to cover the losses if the system collapsed.
Man, you are talking about a certain World War III if this is correct even on the low end i.e. 55 trillion dollars.
Well if Obama didn’t know about it then he is stupid and didn’t bother to read what he voted for in the bailout or he is lying take your pick. Which is it Obama?
Then it's just an illusion. If you and I bet a trillion bucks on a game, the worlds economic system isn't destroyed when the loser can't pay. If, as you say, the derivative markets will tag some with liabilities bigger than all things everywhere, than the whole thing is a joke and not really worth worrying about. There will be the same amount of real assets after the collapse as before. There will just be a greater number exposed fools, whose little monopoly game caused a few liquidity crisis before they got other jobs.
“I think it is providing a smokescreen for the billions of tax payers money given to foreign banks by AIG - the biggest blunder.”
Correct—Glenn Beck did a good job of showing this today.
I Hope Someone Youtubes that Segment. It was really informative!
Derivatives have been around for 20 years. As more Wall Street bankers used leveraging to invest, they wanted some form of insurance against defaults. AIG stepped in and offered the insurance thus lowering the risk of leveraging. When someone creates a fund that puts down 1 dollar to buy 30 dollars of stock or mortgage notes. Another fund wants to invest into this fund, and they themselves used leveraging to invest into the fund at the same ratio. Do the math, if Fund 1 uses 1 dollar to buy 30 dollars of mortgage notes, and Fund 2 buys shares of Fund 1 by using 1 dollar to buy 30 shares of Fund 1, and Fund 3 buys shares of Fund 2 who buys Fund 1 by putting 1 dollar down to buy 30 dollars of Fund 2 and also diversifies itself by buying some of Fund 1 shares at the same leveraging ratio. You end up with an web or network of leveraged funds buying leveraged funds, with AIG insuring each fund against defaults and collecting hefty premiums until one fund fails and drags all the interconnecting funds down with it. AIG suddenly is faced with massive losses as the failed funds try to collect their insurance.
FUBO-RAMA
O ne
B ig
A ss
M istake
A merica
And too the First lady FUMO....
This house of cards is much smarter than many suppose.The willing press will appear to “investigate” for just long enough to feign interest for the sake of the unwashed.When they tune back in to American Idol the story will be left to wither or some other diversion will appear.Meanwhile AIG gets sucked dry while hanging by the puppet lines and the Socialists dodge another bullet.When only half the country remains outraged we continue the spitball fight.
Ditto!!!! That is what makes this whole thing fascinating and ultimately raises the question - what is money????? Problem is that there are brokers/fund companies who have used the credit owed to them (i.e if Fund 1 put one dollar to buy 30 dollars of notes, they owe the broker/mortgage seller 29 dollars) to borrow money to make real investments or expand their businesses. These vendors who supply office supplies, landlords who leased offices, banks who foward the credit, etc, etc, are also caught in the system. Thus letting the system collapse means that companies and banks that lent services and hard assets will also lose as the make believe money system is allowed to fall. This is why Warren Buffet refer to derivatives as “financial weapon of mass destruction”.
Levin was freaking out about this tonight....anybody have the text?
http://www.iht.com/articles/2008/11/25/business/25sorkin.php
Nov 25, 2008 NYT
One reason Obama gave for nominating Geithner was his “unparalleled understanding of our current economic crisis, in all of its depth, complexity and urgency.” More important, he suggested, “Tim will waste no time getting up to speed. He will start his first day on the job with a unique insight into the failures of today’s markets — and a clear vision of the steps we must take to revive them.”.....
....But Geithner’s involvement in several ultimately ill-fated efforts to buttress the American financial system is the very reason some Wall Street CEO’s — a number of whom spoke on the condition of anonymity for fear of piquing the man who regulates them — question whether he’s up to the challenge.
“We have only two things to say about Tim Geithner, who we do not know: AIG and Lehman Brothers,” said Christopher Whalen of Institutional Risk Analytics. “Throw in the Bear Stearns/Maiden Lane fiasco for good measure,” he said, referring to the site of the New York Federal Reserve, where many rescue discussions took place.
“All of these ‘rescues’ are a disaster for the taxpayer, for the financial markets and also for the Federal Reserve System as an organization. Geithner, in our view, deserves retirement, not promotion.”
``SEC. 111. EXECUTIVE COMPENSATION AND CORPORATE GOVERNANCE: "
(iii) The prohibition required under clause (i) shall not be construed to prohibit any bonus payment required to be paid pursuant to a writte(n) employment contract executed on or before February 11, 2009, as such valid employment contracts are determined by the Secretary or the designee of the Secretary."
All the Democrats in the Senate VOTED FOR THIS! Any ONE of them including the one running for re-election in YOUR state in 2010
1. Could have stopped this,
2. could have demanded the bill be actually read,
3. could have forced hearings,
4. could have required deliberation,
5. Could have required it be posted for 5 days,as promised.
But YOUR Democrat Senator did not do that because YOUR Democrat Senator does not believe in performing due diligence!
FIRE THEM ALL!
Wishful thinking if you think for a second that a democrat congress is going to hang (a) one of their own; (b) the first black president.
LMAO!
Now even ASSOCIATED PRESS is picking off 0bama lies.
You gotta know the liberal game is lame when the AP is all over them, even before new fairy tales can take root.
:-D
So let them fail. What's the harm? It's all play money.
Yep. AIG execs bribed the Congress and Obama with campaign contributions in return for a chunk of public money to spend on resorts and massive bonuses.
Yet strangely, there are a handful of posters on FR who defend the whole sordid mess.
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