March 18, 2009
The Erosion of Trust
Wunderbar. In an economy paralyzed by fear and uncertainty, this is just what we need... more uncertainty:
"A senior executive at one of the nation's largest banks said he had heard from several hedge funds that they would not partner with the government for fear that lawmakers would impose retroactive conditions on their participation, such as limits on compensation or disclosure requirements.
"Other firms want to bide their time to see how early participants in the rescue programs are treated before they decide whether to sign up, said the executive, who spoke on condition of anonymity.
"'Why do you think Hong Kong is a better place to do business than Shanghai? Because of the certainty of the contracts,' said another executive at one of the nation's largest private-equity firms. 'Once the uncertainty factor goes up, the less interested you are in doing business because it becomes a more risky proposition.'"
This President doesn't have "the judgment to lead" a sandwich out of a paper sack.
Posted by Cassandra at March 18, 2009 11:55 AM
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I am altering the deal. Pray I don't alter it further!
Posted by: Darth Obama at March 18, 2009 12:51 PM
I'm not sure it's a lack of judgment so much as it is a lack of honesty and courage. Leadership, in other words. Leaders don't flirt with a financial meltdown just because people are yelling at them.
You know, I think I'm really becoming unhinged about this. It seems so simple to me and it's apparently not simple at all to everyone else. The reason the government has pumped $180 Billion into AIG is because having AIG fail will cause a horrendous financial meltdown. The guy Treasury picked to run AIG needs to hold onto the AIGFP employees who are getting the retention bonuses or its going to be very hard for AIG to manage and eventually get out from under the toxic deals they're in. Failing to get out from under those toxic deals means that at best AIG will keep needing more and more government money and at worst that AIG will fail. (See reference to "horrendous financial meltdown" above.) Furthermore, the guy Treasury picked to run AIG believes there's a serious risk those key employees will leave if the bonuses are not paid. And all of this is without even considering the types of consequences contemplated by the author you quote.
Now 99% of the talking heads and apparently every single politician in Washington from Obama on down is hell-bent on keeping that $165 Million out of the hands of those crucial AIGFP employees.
So I'm wondering what the Great Reality-Based Government's logic is here. Have they now decided it's not true that the US needs AIG up and running? (Couldn't they have decided that before they anted up another $30 Million on March 1?) Or that it's not true that AIG needs to hold onto those employees to keep things going? (Because, what, Barney Frank understands bespoke deals so much better than the guy running the company?) Has everyone screaming about the bonuses convinced themselves the AIGFP employees won't really leave? (Really, even with the, you know, death threats and stuff?) Even if they've managed all that, can they honestly believe those private-public partnerships they're pushing to buy toxic assets are going to look attractive if the private side knows they're always at risk of losing their shirts? (Sure, the government gets all the risk and you get most of the profit. Until the blogsphere figures out how the deals work and has a tantrum and we claw back most of your return while vilifying you at every turn.)
Or is everyone in the government willing to run a real risk of an even worse financial meltdown simply because they don't have the guts to stand up to the mob? And if so wouldn't it be, like, you know, the President's job to stand firm and spend some of his valuable political capital explaining why it's a bad idea to plunge the world even further into chaos?
If it weren't for the hideous consequences I would almost hope that Obama and his minions do claw back the bonuses, the key employees do leave, AIG does fail, and the world descends into an even deeper pit. I, however, realize that consequences are real and so can't actually bring myself to even hope for that outcome - much less do everything I can to bring it about.
Okay, I'm done. Thank you letting me rant and rave.
Posted by: Elise at March 18, 2009 01:46 PM
Don't be too proud of this technological terror you've constructed. The ability to destroy an economy is insignificant next to the power of the Hopenchange.
Posted by: Darth Obama at March 18, 2009 01:49 PM
What infuriates me, Elise, is that the President of the United States has done *nothing* but stoke the rage and panic that are gripping the nation.
And then, all of a sudden, he ups and realizes, "Oh crap! I'm making things worse!" Or more likely, "The fear-mongering is no longer useful. In fact, it's getting in the way of what I want at this particular moment, but I reserve the right to resume bad mouthing and fear mongering in the future".
Posted by: Cass at March 18, 2009 01:58 PM
...is everyone in the government willing to run a real risk of an even worse financial meltdown simply because they don't have the guts to stand up to the mob? And if so wouldn't it be, like, you know, the President's job to stand firm and spend some of his valuable political capital explaining why it's a bad idea to plunge the world even further into chaos?
You know, I fail to see how this conversation helps my children.
Posted by: Michelle Obama at March 18, 2009 01:58 PM
"This President doesn't have "the judgment to lead" a sandwich out of a paper sack."
"Can't I just eat my waffle?" -- Barry
Posted by: Red at March 18, 2009 02:43 PM
Confidence might break out if confidence and competence were on display in positions of leadership.
Instead and unfortunately, as we see here, Congress provides unconditional funding by the barge load to everyone, their cousin, and their cousin's pet projects who promptly jump on the gravy train.
Then the public, stoked by tales of government waste, huge debt and rising tax burdens, not to mention daily appearances by POTUS DOOM and his one and only qualified sidekick, Treasury Secretary, Lord Dark Helmet-TurboTax Master, screams to the Congress and the Leadership who, in their shock that such would happen, promptly gives chase.
Hey, haven't we seen this movie?
Posted by: J. Edgar Hubris at March 18, 2009 02:43 PM
I can't be bothered to listen to my husband's Hope and Changiness Doctrine. I have interviews with People, Oprah, Us, Star, The National Enquirer and other press to tell them how I keep it real in a recession. Well, someone has to wake the girls to get them ready to be chauffered to private school, and make sure the chef doesn't put butter into everything.
Posted by: M'chelle Obama at March 18, 2009 02:50 PM
Loved the poster, Darth Obama. Thanks for making me laugh instead of froth at the mouth.
Posted by: Elise at March 18, 2009 03:19 PM
It is with great pleasure that I can now present to you a sneak-peek of President Obama's upcoming G8 speech. A speech that we will deliver at the 35th G8 summit in Maddalena, Italy, this July, 2009.
Click here to begin the presentation.
Posted by: President Obama's Teleprompter at March 18, 2009 03:41 PM
I have felt a great disturbance in the Force. It's like millions of 401K accounts cried out in terror as their worth descended to nothing
Posted by: Obi Gone Brokey at March 18, 2009 03:51 PM
Cassandra, this is somewhat off-topic but may be of interest to you & your readers:
For anyone who lives in or near the Washington DC area, please consider attending the April 1 rally to inform Congress about the damage being done by the ill-thought-out provisions of the Consumer Product Safety Improvement Act. This law is having a devastating effect on businesses...especially small busineses...in industries including toy manufacturing, children's clothing, used bookstores, thrift shops, and sporting equipment. It is also impacting homecrafters. It is an awful example of what incompetent and irresponsible Congressional oversight can do.
Posted by: david foster at March 18, 2009 04:32 PM
Obi Gone Brokey,
I find your lack of faith disturbing.
Posted by: Darth Obama at March 18, 2009 05:04 PM
Help me Obi Gone Brokey. You're my only hope.
Posted by: Red at March 18, 2009 10:12 PM
In these padewans, the farce is strong, yes.
But a dark side there is to credit default swaps.
If error of securitization path you see not, consume all known liquidity shall risk-based financial assets.
Investments remain pat or remain pat not, there is no hedge!
All investments, afraid you are?! You will be. You... will... beeee...
Posted by: Yoda-GreenSpan at March 19, 2009 03:17 AM
And if so wouldn't it be, like, you know, the President's job to stand firm and spend some of his valuable political capital explaining why it's a bad idea to plunge the world even further into chaos?
Previously, Obama had only held *positions* -- nobody ever told him being POTUS was an actual *job*, and he's just starting to realize what that word entails.
Visualize a cinder block attempting to tread water in the deep end of the pool...
Posted by: BillT at March 19, 2009 04:12 AM
I'm with Elise. I'd have liked to see AIG negotiate bonus contracts with escape clauses for a year without profits, if it had been possible to retain the critical personnel on those terms. But that's not what the contracts were that were negotiated. I don't like to see Congress abrogating contracts, or using the tax laws against individuals who happen to be in the hate-spotlight at the moment. I'm also very uncomfortable with the notion that we have the right to prohibit large paychecks for others just because we don't happen to command the unique skills that the high paycheck-earners do. The decision how much to pay a worker (however lowly or exalted) should lie between the employer and the employee, without the government's interference. If the company can't make money paying that much, it can go bankrupt. That goes for General Motors as well as AIG. If we decide we can't afford to let them go bankrupt, then the solution is not to revamp the salary scheme so that it more closely resembles civil service. The idea is for AIG to recover, not to start to look like a government bureaucracy.
Posted by: Texan99 at March 19, 2009 11:42 AM
Have you seen this, I found it on Drudge
Barack Obama's Teleprompter has a blog.
I am following it is getting real popular.
Posted by: Ree at March 19, 2009 11:58 AM