OT: Has anything changed since the bailout?

[fiamme red]

Apparently not, at least as far as executives are concerned.

http://www.nytimes.com/2008/10/08/business/economy/08insure.html?hp

A week after the insurance giant, the American International Group, received an $85 billion federal bailout, executives at its life insurance subsidiary, AIG General, held a weeklong retreat at the exclusive St. Regis Resort in Monarch Beach, Calif. Expenses for the week, lawmakers were told, totaled $442,000, including $200,000 for hotel rooms, $150,000 for food and $23,000 in spa charges.

In addition, the former A.I.G. executive who led the London-based division whose implosion is largely blamed for the insurance giant’s downfall, Joseph J. Cassano, continues to receive $1 million a month from the company, on top of the $280 million he received in the last eight years.

[RPS]

It's impossible to know. Maybe without the bailout they would have spent twice as much, or maybe they would have stayed home and spent nothing.

That's why in general I oppose bailouts and prefer to let free markets do what they want -- within reason. If the stock holders of that company don't care that the execs run it into the ground, then why should I (unless the government makes me pay for their excesses)? Best to keep it separate.

[R2D2]

I say put them in jail and the public will decide if they should be bailed out of jail.

[johnnymossville]

Maybe they're just celebrating. What's wrong with that? *duck!*

[cadence90]

RPS, I agree in principle, but symbols are important also, especially in these times. A lot of people will equate (as most of the citizenry did prior to and after the bailout vote) "bailout" with "helping the corporations, screwing me".

Was this meeting really necessary? Possibly. It's their company (or is it?...I'm not quite sure, really, of AIG's status under the bailout terms). But were the circumstances cited in the OP necessary? NFW, in my opinion.

I would have thought (perhaps naively, I'm no economist) given the "regulation", "oversight", "risk management", etc. terms being thrown around last week that the FIRST provision of the "bailout package" would have absolutely and completely forbidden precisely this kind of "conduct", IF it was conducted under Fed money.

If these people truly want to work on solutions, they don't need Dana Point, or Boca, or the Seychelles...they can meet, discuss and contribute in an office building or a normal hotel conf. room in D.C. or N.Y.C., without collecting $$$ bonuses, and give their golden parachutes to far more worthy causes than their own bank accounts.

Ironically, re: AIG specifically, founder and ex-(pre-Spitzer)CEO of AIG Hank Greenberg, was adamant over the past 2 weeks that AIG could have saved itself: +/- $30 billion uploaded from the 3 (of the 4) still very successful and solvent insurance branches; another +/- $30B contributed from the 130 countries in which AIG has had a long-term job-producing, economy-sustaining presence (his point: "Why should only the US be responsible for aiding a truly global company?" Valid question, imho.); and +/- $20B in loans from the NY Fed. He was never invited to any AIG board meetings or Fed/Treasury discussions.

Again, I'm no economist, but from what I read I'll take Greenberg's ideas and actions over Cassano's any day.
Too bad there was never that chance....

[RPS]

I would have thought (perhaps naively, I'm no economist) given the "regulation", "oversight", "risk management", etc. terms being thrown around last week that the FIRST provision of the "bailout package" would have absolutely and completely forbidden precisely this kind of "conduct", IF it was conducted under Fed money.

If these people truly want to work on solutions, they don't need Dana Point, or Boca, or the Seychelles...they can meet, discuss and contribute in an office building or a normal hotel conf. room in D.C. or N.Y.C., without collecting $$$ bonuses, and give their golden parachutes to far more worthy causes than their own bank accounts.I worked for a major corporation that would blow $1 million on a meeting in a heart beat. The problem with imposing limitations as you suggest is that the government in effect then becomes the CEO. Who is going to decide whether they meet at a Marriott or a Holiday Inn, etc....?

There is no practical way to get government involved in industry at that level and not end up costing us even more. Unfortunately the best approach is to let them swim or sink. We should look at it as a bike race -- let the strongest and most capable win. The other guys don't.

[SamIAm]

I worked for a major corporation that would blow $1 million on a meeting in a heart beat. The problem with imposing limitations as you suggest is that the government in effect then becomes the CEO. Who is going to decide whether they meet at a Marriott or a Holiday Inn, etc....?

There is no practical way to get government involved in industry at that level and not end up costing us even more. Unfortunately the best approach is to let them swim or sink. We should look at it as a bike race -- let the strongest and most capable win. The other guys don't.

Well said.

It would seem impossible to do a worse job than has been done in some of these failures, but rest assured the government could and would do worse in most cases.

[Tobias]

Other changes include a drop of about 1500 points in the Dow, and a significant drop in oil prices.

Undoubtedly both candidates will take credit for lowering oil and cheaper gas and blame the other for tanking our IRAs. ;)

[fiamme red]

On "60 Minutes" this past Sunday, Bob Lutz, the Vice Chairman of General Motors, admitted that he owns two helicopters, one for him and one for his wife, and two private jets.

So tell me, how well is GM doing nowadays? :rolleyes:

[Tobias]

Flame, that road has a slippery slope. I’d proceed with caution.

What about buying Ford, Firestone, Post cereal, etc… where the families are/were extremely rich?

[cadence90]

I worked for a major corporation that would blow $1 million on a meeting in a heart beat. The problem with imposing limitations as you suggest is that the government in effect then becomes the CEO. Who is going to decide whether they meet at a Marriott or a Holiday Inn, etc....?

There is no practical way to get government involved in industry at that level and not end up costing us even more. Unfortunately the best approach is to let them swim or sink. We should look at it as a bike race -- let the strongest and most capable win. The other guys don't.
As I said, I don't disagree. I never meant to imply that the government should impose regulations on where and how and at what cost boards, etc. meet (unless, as I said, those meeting are being funded by Fed money).

What I do believe in is responsible self-discipline (I know that not only corps, etc. are self-indulgent)... again, are $1M meetings in Boca really necessary???

If it were me running a company with that kind of income, I would cut back on the overkill top-exec lavishness, and invest the remainder in social, etc. issues.
This isn't knee-jerk liberalism, either; it's altruism: for instance, look at what J. Irwin Miller and the Cummings Engine Company did for Columbus, Indiana (http://en.wikipedia.org/wiki/Columbus,_Indiana#Architecture_.26_Art).

Pretty incredible stuff, and a boon to everyone.
More Cummings, less Boca....

[Pete Serotta]

:cool: Life will go on---- Greed is a lesson in history and we in the US do not lack for it. I wish we had turned the corner on a new side of human nature BUT I think that the short term future is more of the same....Example was that Citi was to buy WACHOVIA for 2.1 Billion, then a Wells Fargo upted the price to over 10 Billion and the Feds would not be on the hook for anything.....Guess What??? :confused: :confused:

Citi sues for 60 Billion and now the Feds are going to try to make both parties happy_ and richer (except for Wachovia share holders and US..)


We the public can change it BUT we the populace do not have the "anger" to do it yet..... WE are a country that few vote in and few get involved in. There are LOTS of good folks out there BUT we (yeah me to) are caught up in our everyday life.... WHEN was the last leader we elected (no not politician). The "LEADERS are not even in the running (in my opinion)

Wish I had a answer BUT rest assured there is not one single answer and/or one silver bullet. It will take time, pain, and courage....WE are usually impatient or short on all of them. (IT WILL HAPPEN _ THAT I AM SURE :banana: :banana: )

[1centaur]

I have NEVER worked for a company that would even consider the level of that AIG boondoggle. Why the heck not? :crap:

Bob Lutz has been a rich guy for a long time. He does not need GM to be doing well to keep doing well himself. Ironically, Detroit considers him a "car guy," as in he really gets the passion around cars in a way that leads to better designed models that should sell well. You'd think there would be more people with that rep in Detroit.

The Citi/Wells feud is interesting. It's possible that Wells was reckless in its bid and Citi smart. It's possible that Citi has more stuff on its balance sheet that it does not like than Wells does. Note that Wells was bidding for all of Wachovia and Citi was only bidding for part of it, which explains most of the price difference. But, apples to apples Citi got the FDIC guarantee on the part they were bidding on and Wells did not need that. When Citi was the only bidder and the government was desperate to avoid a Wachovia failure I guess Citi could drive a hard bargain.

[Pete Serotta]

:beer: :beer:

I have NEVER worked for a company that would even consider the level of that AIG boondoggle. Why the heck not? :crap:

Bob Lutz has been a rich guy for a long time. He does not need GM to be doing well to keep doing well himself. Ironically, Detroit considers him a "car guy," as in he really gets the passion around cars in a way that leads to better designed models that should sell well. You'd think there would be more people with that rep in Detroit.

The Citi/Wells feud is interesting. It's possible that Wells was reckless in its bid and Citi smart. It's possible that Citi has more stuff on its balance sheet that it does not like than Wells does. Note that Wells was bidding for all of Wachovia and Citi was only bidding for part of it, which explains most of the price difference. But, apples to apples Citi got the FDIC guarantee on the part they were bidding on and Wells did not need that. When Citi was the only bidder and the government was desperate to avoid a Wachovia failure I guess Citi could drive a hard bargain.

[Louis]

Why should anybody be surprised by any of this?

When you make the rules you can pay yourself as much as you like.

Who is supposed to supervise management? The Board? Who chooses them? Management. Oh yeah, shareholders vote on management's proposals. How often do they reject them?

Louis

[Pete Serotta]

LOUIS - - I HAVE SOME RED FOR YOU (YES I WILL HAVE SOME WITH YOU) I THINK YOU ARE GETTING AS JADED AS ME :cool:

Why should anybody be surprised by any of this?

When you make the rules you can pay yourself as much as you like.

Who is supposed to supervise management? The Board? Who chooses them? Management. Oh yeah, shareholders vote on management's proposals. How often do they reject them?

Louis

[Ray]

Greed is a lesson in history and we in the US do not lack for it. I wish we had turned the corner on a new side of human nature BUT I think that the short term future is more of the same....
Where the hell is Gordon Gecko when we need him?

-Ray

[ti_boi]

But these are the people who own you............think about it............ :beer:

[Tobias]

But these are the people who own you............think about it............ :beer:Seriously, we don’t owe our souls to the company store; we owe them to the Chinese and other countries that have been funding our excesses because we couldn’t afford them. We live above our means -- basically consume more than we produce. Below from a recent article on MSN:

http://www.msnbc.msn.com/id/27013906/page/2/

“The alternative — borrowing money from the rest of the world’s savings and handing it out to U.S. taxpayers — would only perpetuate the unsustainable borrowing spree that got us into this mess in the first place.

Unfortunately, all this comes at a time when we’re going to have to figure out how to start repaying the big chunk of money we’ve been borrowing for decades to fund the increased demands on Social Security and Medicare as the baby boomer generation hits retirement.”

[1centaur]

Why should anybody be surprised by any of this?

When you make the rules you can pay yourself as much as you like.

Who is supposed to supervise management? The Board? Who chooses them? Management. Oh yeah, shareholders vote on management's proposals. How often do they reject them?

Louis

Shareholders vote on the Board and on the Board's proposals. Who chooses the Board is an open question - management is usually represented but on a big Board it's in the minority. However, it is the Board that has accepted the absurd notion that adding $5 billion in market cap, for example, is worth X millions in compensation to the CEO when we all know the markets swing between too high wrong and too low wrong on a regular basis. I am often surprised how much time CEOs spend talking up their stocks rather than making their businesses better, and it's stock options in excess that cause that behavior.

[William]

But these are the people who own you............think about it............ :beer:


"Let them eat cake". :rolleyes:





William

[ti_boi]

Once the currency value goes to zero...the civil unrest will begin...and the shooting will start. We haven't seen anything yet folks.

[LegendRider]

Once the currency value goes to zero...the civil unrest will begin...and the shooting will start. We haven't seen anything yet folks.

Something like this?

[ti_boi]

Something like this?


Yes! And coming soon.....................

[keno]

in fact, the dollar is one of the few things we've got that's doing well.

http://www.x-rates.com/d/USD/EUR/hist2008.html

keno

[LegendRider]

in fact, the dollar is one of the few things we've got that's doing well.

http://www.x-rates.com/d/USD/EUR/hist2008.html

keno

yes, relative to other currencies, but you still have to earn them... that's going to be a problem for a lot of folks. 10% unemployment is not out of the question.

[Ray]

yes, relative to other currencies, but you still have to earn them... that's going to be a problem for a lot of folks. 10% unemployment is not out of the question.
One of the things that amazes me is the constant reassurance from economic pundits that this isn't similar to the Great Depression because they had 25% unemployment and we don't have anything like that right now. I always want to reach through the screen and grab them and shake them and remind them that they didn't have 25% unemployment right after the stock market crashed in 1929 - unemployment then was down around 5% or lower. It took until 1932-33 for both the stock market to hit bottom and for unemployment to hit the high mark of about 25%. It took about another 10 years for unemployment to get back down to pre-crash levels.

Which doesn't prove anything about what WILL happen this time. But it illustrates that the pundits are just crazy to say that this can't be as bad as the great depression because unemployment isn't as high as it was at its peak back then.

-Ray

[Tobias]

Which doesn't prove anything about what WILL happen this time.+1

You’ve brought up the possibility of a depression many times now, so what do you think is the likelihood of it happening, and what can we do to avoid it?

[ti_boi]

+1

You’ve brought up the possibility of a depression many times now, so what do you think is the likelihood of it happening, and what can we do to avoid it?


'You' can stay employed....save your cash...hoard some canned goods....water and ammo.....the government....well...they....can.... :banana: :banana: :banana: :banana: :banana:

[Ray]

+1

You’ve brought up the possibility of a depression many times now, so what do you think is the likelihood of it happening, and what can we do to avoid it?
I certainly believe its a possibility but I've also plead ignorance on this stuff many times now too. I have no idea either how likely a full depression is, what it would look like if it arrived, or what should be done about it. I was in favor of something like the "rescue" package based on the recommendations of people I trust, not any first hand knowledge of what I think would work.

My limited understanding of the '30s depression is that the material and people and resources for productivity and employment were all there, but they couldn't free up the money to get things moving. I'm probably wrong, or I'm being much too simplistic - its an admittedly limited understanding. My hope is that we have more tools to attempt to keep pumping money into the system to keep things from falling apart as precipitously or as deeply as in the '30s. But I don't know how any of that works or whether it will.

There are some topics I feel versed enough in to argue the specifics. With the details of any economic debate, I'm unarmed. In broad strokes, I have a deep and abiding belief in gravity and believe it makes perfect sense that what has gone waaaaaay the hell up should also have to come down. My hope is that even if the engine is on fire, the design of the aircraft is sound enough to allow for a glide landing rather than a total crash. So that we can hopefully survive it as a society. I have the same level of hope and faith when I'm on a flight and we hit bad turbulence. And a similar feeling of helplessness to change the outcome.

-Ray

[RPS]

'You' can stay employed....save your cash...hoard some canned goods....water and ammo.....the government....well...they....can.... :banana: :banana: :banana: :banana: :banana:This is like déjà vu all over again.

You guys joke about it but I’ve already lived through it once; and it wasn’t pleasant.

Yes, the previous currency went to zero. Why? The government made it worthless on purpose by changing it so those that had anything of value were brought down to the lowest common denominator – everybody starts from zero. Think of it as massive wealth redistribution except all wealth was wiped out in the process. When you think of big government, think of a government in control of 100 percent of everything. Trust me, it doesn’t work at all.

All guns and ammo were made illegal to prevent anyone from resisting or standing up for their rights. If you didn’t give up your guns they were taken by force and you’d be put in jail – or worse.

Food and clothes were rationed and medicines controlled by the government; and if caught with contraband you’d be jailed.

No doubt to some the possibility of it happening here must seem like a joke, but to me its quite real -- some days it seems like it was just yesterday. I can still recall the despair adults felt after waiting in line for hours for minimal food to be told it ran out. And their kids were still hungry.

[Ozz]

+1

You’ve brought up the possibility of a depression many times ...
It will never be called a "depression"....you can't get elected if you use the "D" word.....I expect it will be called a "unexpected, prolonged recession". :cool:

[johnnymossville]

This is like déjà vu all over again.

You guys joke about it but I’ve already lived through it once; and it wasn’t pleasant...

This post got my attention.

[ti_boi]

I was not joking.

[Ray]

This is like déjà vu all over again.

You guys joke about it but I’ve already lived through it once; and it wasn’t pleasant.

I can't even imagine what it was like going through what you went through. I assume you're talking about Cuba or Nicaragua, but I don't know? If so, I think the situation is different here. We're not, at least not at this point, anywhere close to a popular revolution against an arguably fascist ruling class. And since communism is a pretty thoroughly discredited ideology, it would likely take a very different form even if it did happen. I suspect we'd TRY to pull through it more like we did 80 years ago, with massive government programs and spending to prime the hell out of the private sector until it was ready to take over. That it took an enormous war to put us over the top is not encouraging, but I'd imagine there are other ways to get from A to B. That we're already so deeply in debt might make that impossible - I don't know. Somehow, though, I don't think our basic constitutional rights suffered much from the depression in the 30s (anyone know differently?), so I don't think its inevitable that they would the next time either.

But your basic point is right. Those of us who haven't lived through anything like what MIGHT be coming can't even begin to really imagine it. The post-war generations of Americans have had it easier than any other people probably anywhere ever. If it gets really bad, I worry about how or if we'll get through it. My hope is that our better angels would come to the fore and we'll work together and get it done. But it rarely works that way in history, so I wouldn't say I'm optimistic.

OTOH, it might not have to get that bad. I assume the worst and hope for the best.

-Ray

[RPS]

This post got my attention.You know, the funny thing is that it wasn’t like we were a backwards or ignorant people…….in some ways our government was very advanced. Our constitution addressed some important social issues before the US did.

All it took was one charismatic, optimistic, and very convincing lawyer who loved to talk and give long speeches about how the world could be made better by making it fairer for everyone (honestly, I couldn’t make this up). He promised the people that by taking the excessive wealth of the very rich and giving it to the masses that we would all benefit. He promised free health care, free education, and free lots of stuff. You name it and he promised it.

And everyone bought it hook, line, and sinker – initially to the tune of about 95 percent of the population. After the wealth of the richest 5 percent had been consumed, he moved on down the ladder; and in the process eroded his support little by little. Eventually the majority realized that wasn’t what they had signed up for, but by then it was too late to do anything about it.

He very wisely used the old frog-sitting-in-boiling-water approach. Change was made just gradual enough.


OK, I'm trying to avoid US politics so I'm going out for a ride.

[93legendti]

in fact, the dollar is one of the few things we've got that's doing well.

http://www.x-rates.com/d/USD/EUR/hist2008.html

keno
The US Dollar is doing great against the Canadian Dollar as well - around 0.8911, after being ~0.94 all last year, with a high of 1.12. This year the high was 1.0013.

[93legendti]

A local guy, Dan Gilbert, is pushing an interesting plan:

http://www.asolutionthatworks.com/13/a-solution-that-works-how-to-stop-the-housing-crisis-today/#more-13

Scroll down to "The Solution".

[Joellogicman]

A local guy, Dan Gilbert, is pushing an interesting plan:

http://www.asolutionthatworks.com/13/a-solution-that-works-how-to-stop-the-housing-crisis-today/#more-13

Scroll down to "The Solution".

An interesting article. Refreshing to see the listed problem mortgages does not try and (incorrectly) include Community Reinvestment Act loans as a significant culprit.

A problem is at this point the financial crisis has moved beyond housing to a general distrust in credit across the board. At present, nothing seems to be changing the mindset.

[Pete Serotta]

Dilbert is developing a very good plan...Biden is talking about bringing it to the floor :)