The company should have gone bankrupt (and certainly would have, without US government intervention), in which case none of these people would have seen any bonuses at all. he should be grateful for the $1 :-)
So it's his fault the government intervened, then? Imagine for a moment that logic crept into this train-wreck of a thread:
All I see is
some guy
who
took no salary for a year
on the promise that
he'd get a bonus at the end
The situation became politicized, so his bonus was rescinded. For all those people accusing him of whining, I hope you never complain about politics at your workplace.
Do you realize what the consequences of letting AIG go bust could be? Do you realize that bailing out crippled financial institutions is entirely different from bailing out Motown's idiot car companies? Do you realize that AIG has various divisions and only one of them was trading the toxic financial products that destroyed the company?
Unprofitable firms and crippled fianancial insitituions are a libability to the economy. Proping them up with stolen taxpayer money is not a sound way to run an economy.
Profit and loss exists for a reason, they finetune the allocation of resource to ones we find most efficent. If we don't allow the bust to run the course, than we will be less prosperous in the long run.
Beside, this is not the end of the world. We suffered worser recession like the recession of 1921.(Yes, worser than the Great Depression) Then the 1920s became the roaring 20s.
I am also a fan of "Darwinian Capitalism", but AIG and other huge financial institutions aren't called "too big to fail" without a reason. I advocate pragmatism over blind ideology. As much as I would like to see AIG implode, I think one should be careful and take into account what that would imply, and how the shockwave of destruction would affect the rest of the economy. All in all, all I am saying is: analyze the problem, make decisions based on data, not based on gut feelings or dogma.
Last but not least: the financial world in the 1920s was completely different than what it is today. Unfortunately, in Economics experiments are not exactly reproducible. For one reason they call it the dismal science, right?
I do think there is a legitimate debate as to whether or not we should have bailed out AIG. To address your later points, there are plenty of respectable people who argue we should have let AIG go bankrupt. "Financial experts", if it makes you feel better, for example Jim Rogers, whom I mention since you seem hung up on this point.
Knowing that Jim Rogers argues that we should have let AIG gone bankrupt does not affect me. What I am interested in is knowing WHY Jim Rogers believes that AIG should have gone bankrupt. I would like to know on what ground he argues that. Do you have any URLs on that? I am intrigued.
Going into bankruptcy does not mean going out of business, at least not immediately. It basically just lets you put your debts "on hold" while you either reorganize or wind down under court supervision. Gives everyone time to take a breath and think rationally. Sounds pretty good in comparison to what happened?
I have read articles written by so-called "experts" explaining clearly and forcefully why we should let AIG go bankrupt. Then I have read articles written by other "experts" who claim the opposite, also in a convincing manner. When experts look at the same problem and draw entirely different conclusions, then:
i) their own interests are clouding their judgement.
ii) they don't all have the same data.
iii) their "expertise" is greatly overrated.
In the last few months there has been so much irrationality and lack of transparency, that I now truly find it hard to believe anything I read on this topic.
The argument was NOT the one you cherry-picked. The argument was that bailing out financial institutions is NOT the same as bailing out non-financial institutions. Since you did not get the idea, I assume that Finance is not your forte. My mistake for not having made my point more explicitly.
What we are witnessing is collective schadenfreude. Most people are happy to see these giant institutions fall. Unfortunately, most people know zero of Economics and Finance and fail to realize that if some institutions collapse, we might end up in an even worse situation.
"The argument was NOT the one you cherry-picked. The argument was that bailing out financial institutions is NOT the same as bailing out non-financial institutions."
You asked a series of rhetorical questions of the form " Do you realize blah". That isn't "argument" or reasoning.
Do you expect people to automatically agree to anything you say just because you say "do you realize.."?
"Since you did not get the idea, I assume that Finance is not your forte."
A better assumption is that you didn't make your point well ;-)
True, I concede that I didn't make my point well. Also true is that my goal was to counter the OP's argument, not present a forceful one.
I don't know what you do in your professional life and I would be lying if I said I care. Before coming to grad school I worked at a hedge fund and I realized I know practically zero of Finance. I strongly believe that discussing the details is what matters, and no one on HN is qualified to discuss the details on the AIG debacle. Let's face it. These financial discussions here on HN are usually enormous displays of ignorance (there are rare exceptions). This community's forte is coding. No one around here knows what's on AIG's books. I bet no one around here is a great bankruptcy lawyer. Even those who know Finance only know a few instruments, and AIG was trading a lot of instruments. It would take decades for one to learn all it takes to REALLY understand what's going on in Wall Street.
Knowledge is not a matter of consensus. Some comments are written by clueless people. Many of these comments are upvoted by even more clueless people. I make no claims that I know what is going on, but I see a lot of pompous fools on HN who believe they know it all. I say, let us go back to coding because we all suck at Finance. I only happen to suck less than most because I worked in the field.
"I concede that I didn't make my point well. Also true is that my goal was to counter the OP's argument, not present a forceful one."
I fail to see the difference.I would have thought the best way to counter someone's argument is to make a logical, coherent counter point.
I am not questioning your background. I am sure you have many valuable points to make and I look forward to hearing them. My background is irrelevant as regards how well you are expressing yourself.
Our disagreement (such as it is) revolves around your use of such terms as "pompous fools on HN who believe they know it all".
I'd much rather assume that someone on this board is intelligent (taking out the "fools" part) and has put some thought into what he/ she is saying (removing the "pompous" part). He could still be mistaken though. That doesn't make him a "fool" or "pompous".
It is very possible that you have more knowledge of finance and what happened at AIG than the hacking centric folks on this board. This is a good thing.
What I find less than optimal is your hurried/ill thought out arguments (" do you realize .. ") and your constant "attack the person vs the argument" style.
If you would use your knowledge of finance to illuminate the errors made by others (vs calling them names) with solid reasoning and argument that would be very valuable. That kind of high quality conversation is what HN was set up for.
I'm done with this thread and will let you have the last word if you so wish it. :-)
I am not a United States taxpayer and have no stake in the whole AIG debacle at all. Peace.
All I see is some guy who took no salary for a year on the promise that he'd get a bonus at the end
The situation became politicized, so his bonus was rescinded. For all those people accusing him of whining, I hope you never complain about politics at your workplace.