Posts Tagged 'bailout'

Chutzpah

There are three crosswalks on Ojai Avenue in one itsy-bitsy block between Signal and Montgomery streets.  For some people this abundance of traffic clogging, accident waiting to happen, laughingly named safety zones is not nearly enough.  So they create their own personal spaces by stepping into traffic wherever their little hearts desire.

Sweetie and I were cruising down the Avenue yesterday when a thirtyish woman, cardboard coffee cup in hand,  invited great bodily harm by forging an angular path between the Coffee Roasting Company and Rains department store.  Bristling with indignation, I was tempted to maintain my usual snails pace and come as close as possible to her comely derriere.  Weighing my options,  I took the coward’s way out and merely honked.  She paid not a whit of attention to my muted reproach and slithered her selfish way to the curb.

Sweetie and I then exchanged our usual “what a bozo, big jerk, some people’s children, may she rot in hell” expressions of pique.  We continued our remonstrations by sharing the customary “she must be very lonely and in need of attention.”  Ending with “I hope someone does that to her the next time the bitch is behind the wheel”, we went on our merry way.

Not to be outdone by the jaywalking sphinx, I marveled at the next bit of chutzpah to share itself with my otherwise boring day.  AIG, the multi-gazillion dollar financial behemoth, sought to establish itself as the champion ingrate of all time.

You remember AIG.  When the markets tanked in 2008 and Lehman Brothers was thrown to the wolves for not being big enough to fling the Earth off its axis, AIG came crawling on its knees, pencils in hat, apples on pushcart, and begged for a handout.  Since no one knew what AIG stood for or what they really did for a living, the U.S. Government (i.e. Joe Taxpayer) shoveled  $182 billion into AIG’s sidewalk cigar box.  Well over the amount needed to buy a pack of cigarettes or a bottle of Thunderbird, I wonder if Tim Geithner, Henry Paulson and ninety-nine percent of Congress had any idea what AIG was going to do with the leftover change.

No matter that AIG’s problems stemmed from its own greed in participating in the credit default swaps market (whatever that was.)  The end of America as we knew it would take place as surely as Columbus would fall over the edge of the earth if we didn’t reward private greed with a public handout.  So bailout we did.

Probably more as a result of the improving economy, less hysteria among the general public, and to little if any credit of their own, AIG mended its fences, guillotined the old execs and hired new folks who promised to never do that again.  And they paid back the $182 billion with interest.  And AIG started running TV ads thanking us for our largess.  And everyone lived happily ever after.

Sort of.  Today, Wednesday, AIG’s board of directors meets to consider joining other destitute investors who are suing the U.S. government for $25 billion.  Maurice Greenberg, former CEO of AIG, filed the suit last year on behalf of himself and other AIG investors.  Simply put, Maurice claims that the terms of the bailout were so skewed in the government’s favor that they constituted an unlawful taking of personal property, a no-no frowned upon by the   Fifth Amendment, which prohibits the taking of private property for “public use, without just compensation.”

Mr. Greenberg doesn’t claim that the bailout wasn’t needed.  Just that it was like an armed robbery of a drowning person headed down for the third time.  What Maurice fails to highlight is that without the $182 billion, all of us today would be saying “AIG, who?”

Maurice ran AIG for nearly forty years before resigning in 2005 amid accusations of fudging the books.  The lawsuit against the government has already cost us the time of a legion of U.S. attorneys.  Obviously in need of more recreational reading, Maurice as part of the suit has asked for 16 million pages of government documents.

So you wonder.  Why is AIG even considering being a party to this sham?  As AIG spokesman Jon Diat said… “The A.I.G. board of directors takes its fiduciary duties and business judgment responsibilities seriously,”  Maybe except when there’s a buck to made in the credit default swaps market.

While I was writing this diatribe, the AIG board did meet  this morning and decided not to be a party to the suit.  As the Times noted… Lawmakers in recent days have warned the company not to side with Mr. Greenberg, which would make it “the poster company for corporate ingratitude and chutzpah.”

The jaywalking sphinx is gonna be hard to beat.  But I bet Maurice will keep trying.

Maurice Greenberg

Madame DeFarge would be pleased

AIG…bet you can’t even tell me what it stands for.  All you know is that it must be populated with hordes of money hungry capitalists.  People who are out for the fast buck.  Men (and women) who cut and run.  The worst of America’s shining lights.  In short, folks who reflect the values we all cherish.  Or seem to.

As evidenced by the remorseless blood-lust displayed by the media, members of Congress and the President, the 416 people who salted away $165 million deserve to be drawn and quartered, at least.  A public hanging might be better…with street vendors selling voodoo dolls and popcorn.  Bring back the guillotine.  Off with their heads.  Even Sweetie is beside herself not knowing who to blame for this effrontery.  So she, like you, blames everyone.

What self-righteous indignation.  The nerve of those people at AIG.  Expecting the American people to abide by the terms of a lawful agreement is just too much to bear.  Rebellion is in order.  Anarchy rules.

After all, we’re the good guys.  Congressmen expressing outrage and the squandering of public funds…the same ones who in 2008, along with the Presidential candidates, spent over $2 billion getting elected…with nary a concern about where the money came from or what was expected in return.  Us, after enjoying the bloated gains of the market based in part on the very security shenanigans that got AIG into the shitter, are the ready executioners.

And the poor schmuck who gave up his 5% wage increase so he and his fellow union members could keep their jobs.  What about them?  If a million dollar bonus from GM had dropped into his lap, would he have torn it up and gone back to searching the want ads.  Or the teacher who got pink slipped.  Or the guy in Elkhart who got laid off because folks aren’t buying RVs.  Would he have shipped back the nefarious bonus dollars to his employer and said…”take it, give it to someone who really needs it.  I’ll struggle along as best I can.”  Maybe.

Were the bonuses deserved?  I haven’t the slightest idea or the foggiest notion of the terms of the employee agreements.  Were they a smart idea given AIG’s incredible collapse?  Duh, I don’t think so.  Were they a good idea given the need for continuing public support?  An Einstein I’m not, but a little common sense I got.  Should some genius in the last administration, the current one or any of the zillion congressional committees that doled out the money have said “Ya know, maybe we should review any proposed bonuses before they’re paid.”

But that’s all hindsight.  Meaning they were all thinking with their asses.  Just like AIG did when they dabbled in securities that they couldn’t explain to a Harvard Business School graduate.  Then again, maybe they were Harvard Business School graduates.

So now it’s time for fresh meat.  Time to beat up on AIG and anyone who knows what it means.  Forget get about the real business at hand.

Madame DeFarge would be pleased.

 madame-defarge3

The nerve!

No wonder Merrill Lynch was in trouble.  John Thain was its plotter-in-chief.

While Thain can be faulted for not giving a damn about public morality, he was without a doubt a brilliant strategist.  I can hear him speaking to his lieutenants in September…

…Guys, we’ve had a year of mind boggling losses and the company is headed into the shitter.  We’re all to blame because of our recklessness and stupidity.  But, shit happens.  So here’s what we’ll do.

…First we tell everyone that if Merrill Lynch goes down, it’ll take the rest of Wall Street along for the ride.  We’ve already crucified Lehman Brothers.  The street’s got no stomach for another one.

…Next, we run over to the Bank of America for lunch (their treat) and offer them a deal they can’t refuse.  I think $50 billion for us is a nice round number.  So what if we’ve lost $17 billion in the last four quarters; they’ll never notice it.  They’ve got lots of money.

…I’ll tell Kenny to put out some kind of foolish PR announcement like…

“Acquiring one of the premier wealth management, capital markets, and advisory companies is a great opportunity for our shareholders,” Bank of America Chairman and Chief Executive Officer Ken Lewis said. “Together, our companies are more valuable because of the synergies in our businesses.”

…After all, AOL did it when they acquired Time-Warner.  Nobody asked them what synergies either.

…They’ll agree to buy us for sure.

…Just to be sure the shareholders buy into this fiasco, we’ll run over to the Feds and tell them that  B of A needs a few bucks, maybe $25 billion, to cover our losses.  That’ll jack up Kenny’s share price.

…After we get the $25 billion, and because I’ve been so clever, I’ll propose a $10 million bonus for myself.  Don’t worry guys, I won’t forget you.  You’re my partners.  Forget about those 4,000 worker-bees we just laid off.  They’ve got Unemployment Compensation to tide them over.

…And just to make sure nobody finds out what our 4th quarter looks like, we’ll distribute the bonuses before December 31…instead of after January 1 like we always did.

…Oh, and have maintenance hurry up and finish the million dollar renovation of my office.  Can’t wait to throw my butts into that new $1,400 waste basket.

Postscript…

– 12/05/08 – Merrill and Bank of America shareholders vote to approve the takeover.

– 12/08/08 – Merrill’s compensation committee disapproves Thain’s bonus, but approves staff payouts of $3-4 billion.

– Days later: Bank of America learns that Merrill’s fourth-quarter losses were greater than expected.  B of A begins lobbying the federal government for more TARP money to ease the takeover.

– 12/29/08 – Merrill pays bonuses at least a month ahead of the usual schedule.

– 1/16/09 Treasury says it will give Bank of America another $20 billion in TARP money, to help it absorb the larger-than-expected Merrill losses.

– 1/16/09: Merrill reports a $15.3 billion fourth quarter loss.

-1/22/09  Ken Lewis has a 15 minute meeting with John Thain.  Thain resigns.

Wonder if he took his wastebasket with him.

 wastebasket

The silly season

We went to Buellton on Friday to pick up some olive oil bottles.  We got smaller ones this year because of the lousy harvest.  Hopefully, our friends and relatives won’t notice the size reduction.  And if they do, maybe they’ll use the precious oil with greater discretion.

Buellton’s the place where Pea Soup Anderson is.  I don’t know why they sell pea soup.  Tried it once and nearly gagged.  It’s an another example of how advertising can paper over a lousy product.  GM cars also come to mind.

Buellton is the wrong-side-of-the-freeway stepchild of Solvang, another overrated town that you just have to stop at if you want some Danish trinkets or must have some faux Danish delicacy.  Sweetie and I had lunch at Ellen’s Danish Pancake House surrounded by truckers and old ladies with blue hair.  Food was good, promptly and pleasantly served…and cheap.  The diner’s been there since 1943.  I don’t think Ellen is.

Takes about four hours for the round trip from Ojai.  Plenty of time to stare at the ocean, the oak-studded hills and the red tailed hawks that occasionally soar over the freeway.   The ride demands a pit stop at Gaviota, about twenty-five miles north of Santa Barbara.  It’s a smallish state-run freeway toilet house where you are amazed at the inability of the guy ahead of you to hit the urinal.  And why is it that the same jerk has to scratch unintelligible marks onto the top of  the hand dryer?  Isn’t it bad enough that it takes two days to dry my hands with that war-surplus dryer?  Do I have to gaze at graffiti too?

FM reception is spotty through the hills.  But you can usually get an NPR station that keeps you up-to-date on the lunacy of the moment.  Today was no exception.  Governor Blagojevich was still prominent with his attempt to cash in on a senate seat and assorted other outrages.   Candidates for the seat were falling all over themselves claiming to have never heard of the Governor.  One good thing about this absurdity was that I could now pronounce his name.

The on-again, off-again Car Guy bailout was a heavy hitter, with UAW leader Ron Gettelfinger refusing to back down even if it meant no Christmas goose for a couple hundred thousand of his colleagues.  In response to why it wasn’t fair to save the autoworkers,  Republican Senator Jim DeMint of South Carolina had this to say…

We’re going to have riots. There are already people rioting because they’re losing their jobs when everybody else is being bailed out.

I’m certain that Toyota’s and BMW’s presence in his state had nothing to do with his hysteria.

Senator Claire McCaskill of Missouri was worried about a rider to the bailout bill that gave a pay raise to federal judges…

And my phone is ringing off the hook, Mr. President,” she said, “from people who want to be federal judges.”

But the funniest thing of all was the reporting of the remarks made earlier in the week by the Deluder-in-Chief at West Point.  This was the same setting where in 2002 the Chief enunciated the “Bush Doctrine of Preventive Attack.”   Never one to waiver from a bonehead decision, he now said…

In the years ahead, our nation must continue developing the capabilities to take the fight to our enemies across the world.  We must stay on the offensive.

Silly wabbit.

 bush-in-japanese-gown

Faint heart never won…

Sweetie and I went to Tom’s today.  It was time for her haircut and for me to bring the OVLFF deposit to the bank.  I have the enviable job of collecting the receipts from the Library Foundation bookstore and the contribution box in the library.  The plastic box has been a faithful collector of the coin of the realm from good-hearted souls who think we should actually have a place where people can get free books, use computers and relax without being confronted by the pressures of the day.  People are odd, aren’t they?

When Sweetie was done and looking more beautiful than ever, we got back in the car and started the drive up the hill.  We turned on NPR.  I don’t understand why automakers insist on embedding that silly antenna in the car’s windshield instead of the good old whip antenna that is so attractive to young vandals.  The windshield solution is only good if I’m parked inside the radio station building.  It is seriously challenged going up the Dennison Grade.

We heard Henry Paulson say that he had determined that using the $700 billion bailout for the purpose originally intended was no longer in vogue.  He said he had a different solution that would be much better at reducing my blood pressure, relieving my stress level and increasing my sexual potency.  I wondered if Sweetie could handle it.

My initial reaction was “Gee, that sounds reasonable.”  But that was immediately followed by “I bet the stock market will think he doesn’t know what he’s doing.”  The market went down by 400 points.  As my good friend Tony said a week ago when I mentioned the market crash…”Which one?”

Paulson’s comments were followed by NPR’s discussion with an economic guru about what has become the question of the moment.  Because of the economic turmoil (a kind euphemism for what has become a debilitating recession), should Obama take it easy in the first days of his presidency, catch his breath and go slow.  Or should he go balls out, damn the torpedoes, and do the things he promised us.

I thought about the Iraq war.  How much time did President What’s His Name and Congress spend debating it?  About the same amount of time I take to decide on my menu selection at Sea Fresh.  Yes, it’s true that it turned out to be not so good an idea.

So let’s see.  What needs to be done?  Health care reform is a very good thing.  Investing in renewable energy will end our dependence on the sheiks.  Putting folks back to work rebuilding our crumbling infrastructure will put money in their pockets.  Ending that dumb war will save some bucks and help mend our fences with the rest of the world.  Getting rich folks to contribute a bit more is a nice idea.

Obama has a mandate from the people.  The people want him to do more than be cautious, deliberate, and glacial.  It took eight years to bring us to where we are today.  We don’t have eight years to put us back together again.  Ronald Reagan got a smaller percentage of the popular vote in 1980 than Obama did.  And the great actor said “Full speed ahead…to where I’m not sure but it’s better than dicking around where we’re at.”  Or something like that.

Yes, I know that Obama needs to reach across the aisle.  But, frankly, the Republicans are ready to grab a lifeline from anyone who throws it.  So, go Bama, do it now.  Don’t wait.  He who hesitates.  No guts, no glory.  A chance like this shouldn’t be wasted.  Carpe diem.  I’m with you.

You can even have some of the coins from the library collection box.

Suck it up…

The time has come for someone to show some guts.  Too many congressmen are so busy looking over their shoulders that they haven’t the time to remember why we sent them to that once venerable institution.

They’ve forgotten that their job is to analyze what’s being presented, decide whether it is good for the people they represent and then vote.  Instead, they spend most of their time looking at constituent e-mails and answering irate phone calls.  They forget that most of those contacts are coming from the fringe.  Not the crazy fringe.  It’s simply people who have the time and inclination to yell at their elected representatives…like me.

The Democrats were put in charge of the crazy house almost two years ago because we didn’t like what the other inmates were doing to us.  We expected great things to happen but have, for the most part, been disappointed.

A golden opportunity exists to show the country who’s in charge.  First, Nancy Pelosi and Barney Frank should quit telling the Republicans to round up their stray cats.  If the Republicans are too frightened of what Joe Sixpack will say if the bailout doesn’t make sense to him then so be it.  Nobody much trusts them anyway.

Nancy and Barney should ask their fellow Democrats to get in line and suck it up.  Tell them that this is an opportunity to show some real leadership.  After all, that’s the problem in a nutshell…no leadership.  Bush is done.  McCain, after his failed parachute drop into Washington, is afraid to come out of the bunker.  And Obama is doing…well, maybe something.  Nancy should tell John Boehner that she intends to get her Democrats to vote for the next bill regardless of what his Republicans do.  If they want to sit it out, let ’em.

In case you think it’s a good idea to cast our lot with the Republicans, let me quote a few comments from the Sydney Morning Herald.  That’s right, we even look crazy to the Australians who are not generally praised for level headed thinking.

“I don’t know that we know the path forward at this point,” said a broken House minority leader, John Boehner. After the vote the Republican Virginia Foxx declared: “The market may be down, but the constitution is up.”

Another proud author of the defeat, the Georgian Republican Paul Broun, had an earthy perspective on the bill. “Madam Speaker, this is a huge cow patty with a piece of marshmallow stuck in the middle of it,” he declared. “I’m not going to eat that cow patty.”

A fellow Republican, Thaddeus McCotter, another opponent, found a precedent in Russian literature. “The choice is stark and it was put forth in the book by Dostoyevsky, in The Brothers Karamazov,” he said.

The Republican Todd Akin was a one-man crash of colliding metaphors as he invoked animal imagery (“the horns of a dilemma … two sharp, shiny points we could impale ourselves on”), meteorological imagery (“the sky was going to fall”) and weapons imagery (“it’s nice to take a bullet for the team”).

Supporters of the legislation, by contrast, had trouble mustering the same passion, although the Republican Dan Lungren did find a precedent for the bail-out in his long-ago job as a lifeguard.
His Wisconsin colleague Paul Ryan became entangled in logic as he argued: “This bill offends my principles, but I’m going to vote for this bill to preserve my principles.”
If we had a leader who would yell “damn the torpedoes” we’d all probably fall in line behind him or her.  We’re fed up with not understanding the bailout bill.  We’re scared about the market gyrations.  We’re waiting to find out that the FDIC has run out of money just before our bank failed.  We’re already cancelling trips, putting off buying new underwear, and actually changing the oil in our car before the engine falls out.  We’re ripe for a takeover by anyone who has the guts to actually get up there and say “I’m mad as hell and I’m not going to take it anymore.”

So please, someone get up there and take me.  I’m yours.


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