Mar
19
2009
FiveThirtyEight: Why AIG Paid the “Bonuses”.
When I’m in over my head in understanding an issue – Nate Silver OFTEN comes to the rescue. This AIG thing has been bugging me, both the “populist” (read: media-induced) rage and the political responses from practically everyone, have been incomprehensible given the facts, and bloggers who seem to say “there’s nothing wrong with the AIG bonuses” seem to be somewhere on another planet. But Nate at fivethirtyeight.com has at last dug up sufficient information to explain the problem and propose a rational way forward.
Key quotes:
The employees in AIG’s Financial Products division (AIGFP) were compensated heavily — perhaps almost exclusively — via incentive-based compensation. That is, the employees got a profit share — a rather generous 30 percent share — of the earnings their division made by trading credit default options (CDOs) and related assets.
In the fourth quarter of 2007, the market for CDOs went completely to hell…
This must have posed something of a problem for the employees in the Financial Products division, since their compensation relied on these trades being profitable. So AIG struck a deal with these employees. It guaranteed them, for 2008 and 2009, the same level of incentive-based compensation that they received in 2007 (except for senior executives, who took a 25 percent haircut), regardless of how the division actually performed. The only requirements were that the employees couldn’t quit and couldn’t be fired for cause (a much stricter standard than the usual conditions of at-will employment.)
That’s the background – but here’s the kicker:
If, as at most hedge funds, the employees are buying in with their own capital and bearing a lot of the downside risk, that is one thing. At a publicly-traded company, however, those employees are taking profits out of the shareholders’ hands. And at a publicly-traded company that happens to be owned by the taxpayers, they’re taking money out of the taxpayers’ hands.
Yeah. When we talk about regulation – it seems appropriate to me to talk about compensation policies as well. Commissioned based pay for publicly-traded or owned companies ought to include structures that force an employee to stay put for at least six months during a downturn, and ought to have some salaried pay that sustains those employees in the meantime. Salaries at reasonable rates, as opposed to six and seven figure “bonuses” for non-performance…
QT
Feb
27
2009
As always, Bob Cesca pens a brilliant post. Once a week, Huffington Post’s best poster sheds light on the darkness of our political discourse with humor that makes truth telling bearable…
Except this time I’m not laughing. (Sorry Bob.) This week I’ve seen numerous people who I feel ought to be more reasonable, and knowledgeable, passing along flat out lies picked up from the mainstream media. I’ve heard so called conservatives, with no stake in the elections whatsoever, excoriate our President for doing a less harmful version of what their former champion (Bush II) did, and I have finally had enough with dishonesty and deliberate disingenuousness.
These rich creeps whining on television about “revolution” need to get a grip. Here’s a nice IRS table showing tax rates over the years: http://www.irs.gov/pub/irs-soi/02inpetr.pdf.
Have a look at key dates:
| Tax year |
Lowest bracket |
Highest bracket |
|
Tax rate² (percent) |
Taxable income under–³ |
Tax rate² (percent) |
Taxable income over–³ |
| 1959………………………………………………………….. |
20% |
$ 4,000.00 |
91.0% |
$ 400,000.00 |
| 1962………………………………………………………….. |
20% |
$ 4,000.00 |
91.0% |
$ 400,000.00 |
| 1969………………………………………………………….. |
14% |
$ 1,000.00 |
77.0% |
$ 200,000.00 |
| 1972………………………………………………………….. |
14% |
$ 1,000.00 |
70.0% |
$ 200,000.00 |
| 1979………………………………………………………….. |
14% |
$ 3,400.00 |
70.0% |
$ 215,400.00 |
| 1982………………………………………………………….. |
12% |
$ 3,400.00 |
50.0% |
$ 85,600.00 |
| 1989………………………………………………………….. |
15% |
$ 30,950.00 |
28.0% |
$ 30,950.00 |
| 1992………………………………………………………….. |
15% |
$ 35,800.00 |
31.0% |
$ 86,500.00 |
| 1999………………………………………………………….. |
15% |
$ 43,050.00 |
39.6% |
$ 283,150.00 |
| 2000………………………………………………………….. |
15% |
$ 43,850.00 |
39.6% |
$ 288,350.00 |
| 2001………………………………………………………….. |
10% |
$ 12,000.00 |
39.1% |
$ 297,350.00 |
| 2002………………………………………………………….. |
10% |
$ 12,000.00 |
38.6% |
$ 307,050.00 |
(If that chart doesn’t show up well, look on page 5 of the link).
The point being – the whiners are complaining about a tax hike that brings them no where near as high as the highest tax bracket during the majority of the Reagan years – and the one year when Reagan cut taxes down to 28%, he left George the First with having to break a promise and raise taxes (thereby likely costing the republicans their run).
Whiners. They want a revolution? While millions of Americans are LOSING THEIR HOMES and their JOBS and their HEALTH CARE… they want a revolution because they are going to lose less than 2% income to taxes – taxes to help get the country they claim to love out of its bind?
They want a revolution? They want to foster an environment where MY President is threatened by their reckless, selfish chatter about birth certificates and tea parties? Oh really? BRING IT.
They might get more than they bargained for.
QT
More on
Read the Article at HuffingtonPost
Feb
25
2009
This is priceless…
Northern No Trust had a lavish dinner at the Ritz Carlton on Wednesday with a concert by Chicago (at a $100,000 fee); rented a private hangar at the Santa Monica Airport on Thursday for another big dinner with a gig by Earth, Wind & Fire, and closed down the House of Blues on Sunset Strip on Saturday (at a cost of $50,000) for a dinner and serenade by Sheryl Crow.
In the ignoble tradition of rockers who sing for huge sums to sketchy people when we’re not looking, Crow — in her stint as a federal employee — warbled these lyrics to the oblivious revelers:
“Slow down, you’re gonna crash,
Baby, you’re a-screaming it’s a blast, blast, blast
Look out babe, you’ve got your blinders on …
But there’s a new cat in town
He’s got high payin’ friends
Thinks he’s gonna change history.”
I am increasingly skeptical of our Secretary of the Treasury. I think our President likes Geithner as a fellow smart and elegant (thank you, Sean Penn!) guy. I recall reading that during the selection process, Obama just “fell in love” with Geitner. Well. I think the honeymoon will be over soon enough if Geitner keeps pouring money needed for other priorities into the banks while not really holding them accountable, and from all signs that I can see, the Treasurer’s plan doesn’t quite meet the president’s lofty goals for accountability.
We shall see. I remain committed to prayer for our nation, and for our president.
QT
Feb
02
2009
http://www.bobcesca.com/blog-archives/2009/02/scarboroughs_re.html#comments
I am an American Soldier. I have served my country honorable in Iraq. After surviving both of my “DO NOTHING” deployments I was eligible for the EITC. The reason I was eligible for the EITC was that all my income in a COMBAT ZONE was non taxable income. This is the same for every soldier, sailor, marine and airperson that makes less than $88,000 of base pay in a COMBAT ZONE. I was extremely grateful to receive this tax credit. It felt like my government was honoring my service. So yes, dodging IEDs and small arms fire is “DOING NOTHING” and running you fat mouth for millions of dollars every morning is “WORK”.
Arianna Huffington talks about the Marie Antoinette attitude of some – wall street/bank/automobile ceo types. But the fact is – it permeates every facet of American life. Even the middle-class has this completely out of touch attitude toward the genuinely poor, or the lower-middle class stuck in slum conditions through no fault of their own.
GItheJoe’s comments are in response to Joe Scarborough’s pontifications on whether or not working people deserve and earned income tax credit. At a time when our nation is suffering – when the well off are watching their shares decline – how much more so are the poor watching their ability to make ends meet decline? Isn’t this a time for openheartedness and opennhandedness? I mean – we don’t have unlimited resources, but this isn’t a time to ask why some are getting. It’s a time to ask – will giving in this way help? Any other question is heartless, and deserving of contempt.
