Saturday, March 28, 2009
Michael Obama Jordan
"President Obama joined yesterday in the clamor of outrage at AIG for paying some $165 million in contractually obligated employee bonuses. He and the rest of the political class thus neatly diverted attention from the larger outrage, which is the five-month Beltway cover-up over who benefitted most from the AIG bailout. ... This federal takeover, never approved by AIG shareholders, uses the firm as a conduit to bail out other institutions. After months of government stonewalling, on Sunday night AIG officially acknowledged where most of the taxpayer funds have been going. Since September 16, AIG has sent $120 billion in cash, collateral and other payouts to banks, municipal governments and other derivative counterparties around the world. ... This comes after months of claims by Goldman that all of its AIG bets were adequately hedged and that it needed no 'bailout.' Why take the $13 billion then? ... Given that the government has bever defined 'systemic risk,' we're also starting to wonder exactly which system American taxpayers are paying to protect. It's not capitalism, in which risk-takers suffer the consequences of bad decisions. And in some cases it's not even Americans. ... The politicians also prefer to talk about AIG's latest bonus payments because they deflect attention from Washington's failure to supervise AIG. ... AIG's Financial Products unit has been overseen for years by an SEC-approved monitor. ... The Washington crowd wants to focus on bonuses because it aims public anger on private actors, not the political class", my emphasis, Editorial at the WSJ, 17 March 2009.
I think the bonuses can be clawed back as payments in "bankruptcy", the $165 million in question is .001 of AIG's $173 billion bailout. Why look at it? Because the public has been on the wrong side of the best head fake I've seen since Air Jordan hung up his shoes! Who at Goldman Sachs (GSG) will be indicted over the deceptive publicity releases? Where's the SEC? Where's the DOJ? Does GSG own everyone?