Failure Bonuses

AIG in the news again. Hundreds of millions of dollars have to be paid out in three payment for bonuses and retention to employees of the company AIG which has received the largest amount of any financial institution from government bailout money paid for by American tax payers. What kind of financial system you have going that you have to pay bonuses to people who ran your company into the dirt. In most companies an employee would get fired for losing a lot less money than these people getting bonuses lost for their companies.

"Liddy said he had "grave concerns" about the impact on the firm's ability to retain talented staff "if employees believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury." Washington Post."

It would seem that in my uneducated opinion that these people can't be all that talented if they drove your company into the ground requiring hundreds of billions of dollars in tax payer's money to bail you out and keep you in business.

From the start I have felt that these institutions should have been allowed to fail and not have been bailed out in the first place. If we would have did that these institutions that have for only one conceivable motive, greed, would have had to down size, be more modest in their profits, and/or fold. Any institution following in their wake would be much more cautious in their approach of bad lending practices and be more fiscally responsible with everyone's money.

At the very least, the companies that are failing this bad need to have most of their upper executives fired and if they do get hired back, hired back at a rates that reflects their value, not reward them for bankrupting the institutions that they work for. If they were all fired the companies would not be under any contractual obligations to pay people for failing so miserably.

I finally agree with a Republican, Republican Sen. Charles Grassley of Iowa who made the statement:

"I would suggest the first thing that would make me feel a little better toward them [AIG executives] is if they follow the Japanese example and come before the American people and take that deep bow and say, 'I am sorry,' and then either do one of two things: resign or go commit suicide," he said. "And in the case of the Japanese, they usually commit suicide." "Cedar Rapids, Iowa, radio station WMT"

Pretty much sums up my feelings about the subject.

Free Money

People, it is time to call, write, or Email your representatives in government office. We are getting ripped off big time over this bailout deal. According to an Associated Press article the banks and institutions that have received part of the first half of the $700 billion government bailout package are saying that they don't know what they are doing with the billions they have gotten from American taxpayers. They claim that they are not even tracking that money which is pretty sad and unbelievable. You can read the article from the Associated Press here: http://news.yahoo.com/s/ap/20081222/ap_on_bi_ge/meltdown_secrets

Here is a copy of the Email I sent to one of my representatives:

Dear Congressman Obey,

I have just read an Associated Press article about the unaccountability the banks and financial institutions have with the almost $350 billion dollars they have received from American taxpayers in the form of a government bailout. Here is a link to the story: http://news.yahoo.com/s/ap/20081222/ap_on_bi_ge/meltdown_secrets

This is totally unacceptable and I would hope that there are going to be some accounting for the money these institutions already have received before they get a dime more out of the second half of $700 billion earmarked for bailing these businesses out. It's unacceptable and unbelievable that these businesses would receive billions without tracking what they are doing with the money, if this is really the case they are not fiscally responsible enough to receive any more taxpayer money. If they were lending money out you better believe that they would want to know what the intended purpose of that money was and they would keep track of it.

It burns me that Bush had to have the line about the businesses that have their troubled assets bought up in the government bailout scheme have to follow the rules of the bailout bill, but then Mr, Paulson instead bought up stocks in their companies effectively voiding out any oversight or accountability for the money they received from taxpayers. What the heck is that Paulson guy doing anyway? The Bush administration and Paulson basically got what they asked for in the first place, a large amount of money with no restrictions on what was done with it or who it was given to. Something is wrong when the administration asks Congress for that much money to do one thing and then after they get the money they do whatever they want with it anyway, don't you guys feel like you been hoodwinked? I do, even though its what I expected in the first place. You people in the House and Senate better be getting together and demanding information and accountability about the first half of the $700+ billion before you release any of the second half of the money or you all are going to have as high of approval ratings as Bush enjoys, and that wouldn't be good for your future elections. I just find this totally unacceptable.

Sincerely,
xxxxxxxxxxxx

Update:

This is the letter I received back from Congressman Obey:

Dear Mr. Chapek:

Thank you for contacting me to express your concern about how the Treasury Department is implementing the bank rescue program.

I absolutely share your concern. House Financial Services Committee Chairman Barney Frank is holding a series of hearings, with some already underway, about the implementation of the program. This is going to continue to be a challenge in the coming months and will be one of the many major issues President-elect Obama will face when he takes office in January.

Please be assured I will keep your views in mind if further legislation is brought to the Floor of the House this year and also into the next session of Congress.

Thank you again for taking the time to get in touch.

Sincerely,

David Obey
Your Congressman

Throwing Money to the Wind

What a mess this country is in. It's not all this country though, it's countries around the world. The economic situation is pretty bad all over. There are many countries where it's worse than it is in the United States. In a lot of other countries people and police are protesting and battling in the streets. Thinking back to hurricane Katrina, it really does not take long for all for lawlessness to break out when society starts to fall apart. We are learning that there are many different ways a society can fall apart too.

In Katrina it was the lack of services because they were knocked out from the storm. No electricity, no power for lights cooking, security, or most importantly refrigerators, because of no refrigeration people ran out of food very quickly. Because of no electricity for refrigeration stores didn't have food either, trucks could not bring in food and supplies because of the flooding. Hunger is a really powerful motivator. If you don't have food, you are going to try to get it one way or another even if you have to steal it and if it gets bad enough, to kill for it. Another drive that overrides all else is survival for your self and loved ones, if you or your love ones need medical supplies you are going to do everything in your power to see that they get the help they need.

Other causes of society breakdown is when the government breaks down. When this happens individuals and small groups start taking things into their own hands, and nothing is off the table when survival is at stake. Money can be another reason for a breakdown of a society, either too much of it, or too little of it, either way it leads to eventually not being able to afford the basic necessities. There are numerous other ways that a society breaks down including racism, difference in moral standards, religion, to much of a gap between the haves and the have nots.

The U.S. government has decided to throw money at the situation. First it was the financial institutions. It was decided that it would take at least $700 billion to set these Wall Street businesses right. I think giving out any money for them was a mistake. I did not agree with bailing them out in the first place and I am even more convinced that my thoughts were correct now that half of the $700 billion has been distributed.

I knew when the Bush Administration first came out with this plan that it was going to be no good. They first wanted the money to dole out with no restrictions, no oversight, and no legal or financial accountability. President Bush just wanted that amount to give to Mr. Paulson from the treasury to hand out to whichever companies or institutions he saw fit to do with whatever he thought would help the economy. Luckily, or maybe not depending on your opinion, Congress got involved and decided that they would need to have some oversight and not just cut Mr. Paulson a blank check. After some hemming and hawing they came up with a bill to give half the money to Mr. Paulson and have some oversight and restrictions on top executive salaries and bonuses. The whole idea of the plan was that Mr. Paulson would use the money to buy troubled mortgages and when the price of real estate recovered the mortgages could be sold for a profit and the money paid back to taxpayers where it was going to come from in the first place. When the bill went to the president he wouldn't agree unless there was one line stating that institutions that had their mortgages bought up would have to abide by the rules in the bill. Funny thing though, after getting Congress's approval for the $350 billion Mr. Paulson decided on his own not to buy up troubled mortgages. Instead he decided to just inject the money into the companies by buying stock in their companies and because of the line Bush made sure was in the bill, it pretty much voided any restrictions or oversight as to how the bailout money would be spent. It wasn't long before Bush and Mr. Paulson were on television pleading with the institutions to use the money given them to loosen up more money for lending, but of course there wasn't much they could do except plea at that point. Now if the economy gets even worse and these companies that we have bailed out go under what will their stock be worth, nada, just what the American people will get back from bailing out these companies. By the time the economy straightens out these companies have a good chance of being liquidated or will change hands and their original owners will be on to the next big thing, or perhaps starting new financial companies and there will be no entity to pay the tax payer back.

Next in the line of people wanting the government to bail them out was the big three auto manufacturers. Executives from the big three flew their private charter jets to Washington to ask for their share only to be mocked for flying their private jets into town. After a stern scolding from Congress the executives were sent home without a deal with the instructions to come back after they show how they would tighten their belts and restructure their companies so they could compete with the non union car manufactures in the United States and foreign car manufacturing companies. After what happened with the bailout money given financial institutions it looked like Congress was maybe getting smarter, but Bush stepped in and after scaring the big three talking about maybe letting them have a controlled bankruptcy decided that he would bail out Detroit with some money from the $700 billion gotten to prop up the financial institutions.

We should have never started giving money away. I believe that we are going to hit bottom anyway the only difference is that we are going to have at least $700 billion less when the dust clears. The free market system is supposed to be that, a free market. The financial institutions at least would have never took such chances if they weren't counting on the government bailing them out if it hit the fan. The auto companies have been fighting all the way of having higher mpg standards and alternative energy autos, the very issues they will have to address if they are to be able to compete with foreign auto manufacturers.

We started down a slippery slope now that we started giving money away. In the past weeks I have heard of many other big businesses jumping up shouting that they too will need government bailout money to keep their workers working and their companies above water too. There are many voices calling out for money because they are all thinking, "Well if they are bailing out them guys I should be able to get something too." How many more companies can we not afford to bail out? I think this is a big mistake, it's like throwing money to the wind.

T. A. R. P. = Covering Over Taxpayer's Eyes

Troubled Assets Relief Program (T. A. R. P.) should stand for tarp, a covering over the taxpayer's eyes so they don't see that this is just a wealth distribution scheme for big business. This whole thing is such a mess, first the administration asked for $700 billion dollars for a bailout program and said that they would create accountability by buying up bad mortgage assets to hold until such a time that the mortgages would increase in value and be able to be sold to pay back taxpayers who are ultimately paying the bill to bail out Wall Street.

Earlier this week Mr. Paulson from the Treasury said he decided that that was a poor plan to buy bad mortgage debt and instead told us, that after getting this money, he decided to just buy stock in the failing companies to faster inject cash into the failing institutions. The problem with that is instead of having some land or property that would eventually be worth something again when the market recovers, Mr. Paulson has basically a handful of worthless pieces of paper bought from failing institutions that have a good chance of filing bankruptcy in the future leaving the taxpayer with worthless paper in exchange for $700 billion dollars. The other problem with just buying worthless stocks is that Mr. Paulson, the President, or the Congress has no way of restricting what these institutions do with the money that they are given.

It was never the Administration's intention to hold these institutions accountable for the money in the first place. If you look at what President Bush and Mr. Paulson originally asked for it was for $700 billion dollars to spend in which ever way they see fit, to anyone they see fit, for whatever way the institutions that receive the money see fit. Are the American taxpayers the only ones that saw this for what it really was, a wealth distribution program where every man woman and child would give $2300 to the fat cats on Wall Street who are making millions and getting big bonuses even though they ran their companies into the dirt with their greed. And what happened?

The institutions that received the bailout money, that the Bush Administration's "intention" was to free up money tied up in bad mortgage deals to lend out to people, to get the economy moving again, decided that they still don't want to free up money for lending. President Bush was on national TV pleading with the financial institutions to fee up that money, but without the teeth of regulation and oversight there is not much chance of the institutions using the money for much more than to shore up their accounts, buy other failed banks, and/or give their management people and stockholders something. We've already seen how they been spending money knowing that they are getting bailed out by the taxpayers, there were big parties, million dollars a month for people on retainer, and holiday bonuses of up to $230,000 for administration making close to $400,000 base salary. So for those paying attention it is Fat Cats - $350 Billion, taxpayers nada.

Now that the 2nd bailout plan didn't work, Mr. Paulson has a new, new plan on another way to use the 2nd half of the $700 Billion bailout money to bail out these financial institutions. Again I don't see much for regulations or ways to insure accountability. This latest play doesn't directly help mortgage holders that are either already in foreclosure or will be shortly. That's the one thing I don't really understand. One one hand I can't see giving money to people who obviously knew they were trying to buy properties they couldn't afford. On the other hand, there are a lot of banks and mortgage companies that took advantage of the housing bubble to convince people to take out money against their mortgages because the value of their homes had went up so much. Many of these people didn't fully understand what the banks were getting them in to and they took their lending institution at their word that they were sitting in a good spot to take on more debt. To a certain extent, if the government would just take over them loans that are on amounts higher than what the property is worth, reorganize the mortgages so that the people could have payments that they could afford, then the mortgages wouldn't be bad debt and shouldn't strain the financial institutions of Wall Street.

Now the major domestic car manufacturers want to be bailed out too, they are claiming that they will be forced into bankruptcy if they are not. Originally Obama and the Democratic Congress wanted the Bush administration to help bail them out too, but the Bush Administration didn't want to include the auto makers. Now the Bush Administration says that they would be willing to support bailing out car manufacturers long as there are no strings holding car makers to use the money to make more energy efficient cars to make the auto makers more competitive with other car makers. Again the Republicans don't want to place any restrictions on car makers on how they use that money. What is the sense if that? If we are going to bail them out shouldn't we retain the right to say how we want this money used?

President Bush recently made a speech claiming that the fault is not fault the free market system. This is one of the first things I agree with that Bush has said in a long time. The free market would be a working system without trying to bail out industries. It's not like these financial institutions didn't know what was happening, they just were hedging their bets that the government would bail them out. The auto makers and Republicans have been fighting any effort to make strides to increase mileage per gallon or make alternative fueled vehicles, two things that have caused the big three auto makers to lose ground to foreign car makers. The Bush Administration has already wasted $350 billion dollars that has no regulations on how it's spent for these failing industries to take and cut and run when that runs out. These industries should have just failed in the first place, they are going to any way, the only difference is this way taxpayers are going to be out $700 billion dollars first.

All in all this is a hell of a Christmas bonus for big business from the lame duck Bush Administration at taxpayers expense.

We Continue to Get Fooled Again

Unlike The Who song in the 70s, that states, "we won't get fooled again", it is instead, "we continue to get fooled again".

Remember that $700 billion bail out package for Wall Street financial companies that was supposed to free up money from bad debts for lending to get the economy back rolling? With most of the first half of that money gone or spoken for, it didn't work. A week ago a lame duck president got up on national television and pleaded with financial institutions not to hold on to that money to shore up their financial situation, or buy other failing institutions, but to use it for lending like it was intended. It looks like the original plan which was to buy up "bad" mortgages and eventually sell them at a later date paying back taxpayers when the housing market was higher wasn't really considered too hard to start with. Instead of buying failed mortgages, setting some kind of stipulations on how the money was spent or used to insure that the taxpayer could be paid off, the administration decided that we would just buy up the worthless pieces of paper called stocks from companies that no one else would ever in their right mind buy, because the companies are failing in the first place. It looks like Bush get's his money for his big business buddies one way or another. Now that almost half the money is gone, and they can't get banks to loosen up money for lending, the government is thinking about maybe starting to give the second half of the money to directly help homeowners, let's hope that they come up with a few better rules for regulating that half of bailout money.

Talk about redistribution of wealth? How are the bailed out or soon to be bailed out institutions reacting to the economy downturn? They are paying bonuses in the area of $230,000 to employees making base salaries of $400,000. Makes perfect sense to me. After your upper management loses all your money resulting that your company needs to be bailed out by the taxpayers, your management people need hundreds of thousands of dollars of bonuses to know they are appreciated. What?!! Yes during house hearings I heard that these institutions were paying up to a million dollars a month to people who weren't even working at the company anymore, but who were held on on retainer because the companies were afraid that these people would spill their trade secrets with their competitors. Trade secrets??? Mr. Big Business, you are broke, what is it about your company procedures would anyone want or value? Gee what would these trade secrets be? Something like, "How to Bankrupt Your Company and Get Bailed Out by the Government"? Or maybe, "Screw Your Company and Get a Million a Month for Not Working". And while those guys who make 400 thousand dollars a year and bonuses of 230 thousand dollars are getting paid by the American taxpayer if, God forbid, that taxpayer gets a 1 thousand dollar tax break, it is an evil wealth redistribution plot that will bankrupt the top 1-2% of Americans. While you are thinking about that, think about just how much that health plan or education, or disability is such a drain on society compared to them guys pulling in $600,000 dollars plus a year at your expense.

This is not even touching on all the taxpayer money going towards the war in Iraq or money going to other governments that are fighting wars for us. What about all the money going to the company Dick Cheney has ties to that supplies the instruments of destruction to support the wars around the globe. I bet that is another company that isn't feeling the pinch of the bad economy, the only company other than big oil. It isn't chance that in the movies Batman and Spiderman that more than one multimillionaire's fortune was built up using money from the arms industry, kind of like art reflects reality.

I have a bit of news for them politicians. The market is failing and stalled because the common man, the one that's not in the top 2% of income earners, doesn't have any money to spend on things that aren't absolutely necessary. Hell most of them don't have the money to spend on the things that are necessary. That what happens when you cater to the top 1-2% of the people who make the most, they divvy things up to make the most out of everyone else until everyone else don't have the money to keep the economy going.

These things should make you mad as hell. They should make you want to hold people, corporations, and administrations accountable for the mistakes that make and especially when they do things that either are illegal or should be illegal. The Bush/Cheney administration needs to be held accountable for their deeds while in office, they surely didn't protect the constitution that they swore to protect. They started wars where we had no business, screwed up the economy for their buddies gain, went against Geneva conventions and international law. The first step to fixing things is to find and admit where things went wrong to get to this time in space that we are in, and take steps that these things do not ever have the chance to happen again. Impeach Bush/Cheney. Then prosecute them.

Bailing Out Automobile Manufacturers

Well we have been helping all other big businesses and industries, so now the automobile manufacturers want to get in the act too. I mean after all we have been giving the oil industry tax breaks and making it possible for them to record record profits for two quarters in a row even though the rest the country is in financial chaos. We are rewarding the banking and financial industry hundreds of billions for their ungodly salaries, greed and waste. It's only fair for the government (the American tax payers) to turn around and bail out the automobile manufacturers. These are companies who have resisted all the mpg mandates that the government tried to impose on them to make their cars better for the environment and more completable with foreign imports. They have been pushing bigger and bigger SUVs and even most their other car models are getting on average less mpg than they did 10 years ago. The people in the rest of the world have been shaking their heads at us Americans in disgust as we zip around in our gas guzzling SUVs Why has the auto industry push these dinosaurs of responsible automotive design? They make the highest profit margin on the SUVs and they can get around some of the environmental and safety requirements, so in other words greed. So now because the auto industry also hire a large number of people that are making ungodly amounts of money, we are supposed to bail them out for their refusal to make autos that can compete with cars designed overseas.

There are reasons that bailing out the auto industry is as stupid as the breaks we have been giving the oil and banking industries. As mentioned above, The government has been trying to push regulations for higher mpg, which would have made the American companies more competitive against foreign companies and would have forced companies to make more smaller and mid sized autos instead of huge SUVs that according to advertisements they push as something people just got to have. Many of the American automotive companies are tied in with foreign companies to make cars in Europe that would fit the bill for suddenly economy minded American consumers, Some of the foreign manufacturers make cars in the U.S. to sell in the U.S. aren't these basically cars made in America? The automotive manufacturer's will have no better use of the money than the banking industry. The president was just on the TV pleading with the banking industry to not sit on, or invest in acquiring other defunct banks with the money that was given them from the government to free up money for lending, the auto industry will probably not put that money into retooling like it would be meant to used, instead they will probably use it to pump up their worth and pay their shareholders and executives as they wait out the crunch while waiting for a better time to again push SUVs back at the American public.

The biggest fear by oil companies both abroad and at home is that the American public start conserving oil enough it will drive the prices way down. We have already made Saudi government nervous because we have been conservative and it has drove down prices. One of the best things we could do for our country is wean ourselves from foreign oil. If American car manufacturers made smaller cars with better mpg it would tend to drive the cost of oil down even more reducing our dependence on oil from parts of the countries that aren't necessarily friends of ours. In a way if we bail out the auto manufacturers, we are enabling them to make bigger cars that drive more of our energy dollars overseas.

Most of all if we are to have unregulated capitalism we have to allow the market fall on big industries and institutions that continue to do stupid things for greed, if the banking institutions weren't thinking the government would bail them out they would have never took such chances or paid their administration people so well. It's the same way with the auto industry, if they wouldn't have got lost in their greed of high markup SUVs they would have been concentrating on building competitive energy efficient vehicles. They would still be hit by the economic situation that our country is in, but they wouldn't have set themselves up for the loss of business to car manufacturers who have already retooled to make energy efficient vehicles long ago.