Robert Reich : Our democracy is seriously broken. - Page 7 - Mercedes-Benz Forum

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post #61 of 86 (permalink) Old 03-18-2009, 10:00 PM
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That's a pretty big bone.
Insert Diceman nursery rhyme here......................
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post #62 of 86 (permalink) Old 03-18-2009, 10:10 PM Thread Starter
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Here's news for some of you ... we are officially bailing out hedge fund investors, the quintessional definition of the rich.


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While regulators don't expect to bail out hedge-fund bailouts, they are examining whether any could pose a threat to the broader financial system.
The inquiries came as broader hedge fund concerns began to mount. Rumors continued to circle about losses at hedge funds, which collectively control some $2 trillion in assets world-wide.

The rumors were so acute for Citadel that its chief Kenneth Griffin held a conference call Friday afternoon for holders of $500 million in Citadel debt. As many as 1,000 other callers jammed a listen-only line for the call, leaving Citadel scrambling to add more phone lines.

...

The 40-year-old Mr. Griffin oversees some $16 billion in assets, and is having the worst year of his career. As of a week ago, his main funds were down 35% during 2008.

Citadel said
its bets on convertible bonds, bank loans and investment-grade bonds were hedged with credit-default swaps, or insurance-like contracts that allow investors to bet on the prospects of companies' debt.

The historical relationship between securities held by Citadel and the value of derivatives tied to those securities has seen a "tremendous dislocation" that rendered those hedges ineffective and "rewriting the world of finance in less than eight weeks," Mr. Beeson said.
Citadel Seeks to Reassure Debt Holders - WSJ.com
So the taxpayers are now making good on Citadel's BETS.

GOOD JOB !!!
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post #63 of 86 (permalink) Old 03-18-2009, 10:25 PM
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I disagree. Barney has asked for names of the employees who received bonuses. Images of Joe McCarthy came to mind.
Now that's a cool leap.

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post #64 of 86 (permalink) Old 03-18-2009, 10:26 PM
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The bonus blowup is a strawman compared to real crime being committed.
What's the crime?

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post #65 of 86 (permalink) Old 03-18-2009, 10:38 PM
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Alternatively, the counterparties can stand in line in bankruptcy court like everyone else.

Citadel got $200M and guess what, they are a top contributor to Obama's campaign and they are stationed in Illinois. I gather you don't see any of this as a conflict on interest.

It is appalling MSM has given the Obama administration a free pass and not investigated all the inside dealings through AIG other than talk about the bonus strawman.
It has not given Obama a pass any more than it gave Bush a pass on all the oil company donations and Real Estate developers that donated to his campaigns.

Folks with lots of money donate to big campaigns. That is a fact of life. If you look at everyone that donated to Obama you will find other folks that, at some point in the next four years will be in industries that touch his Administration.

Here in Kentucky folks hedged their bets and used to donate to both until computers allowed that to be checked quickly. That occurred nationally also.

Is it a conflict of interest or a coincidence? While you say the Main Stream Media has given Obama a pass you referenced both the Wall Street Journal and Reuters [which supplies everyone]. There are 87,000 articles on CIG and more on the owner. So it is not as if they are being ignored. If the Chicago Sun Times has not found a conspiratorial link between Citadel and Obama, nobody can.

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post #66 of 86 (permalink) Old 03-18-2009, 10:39 PM Thread Starter
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What's the crime?
Misuse of taxpayer funds.
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post #67 of 86 (permalink) Old 03-18-2009, 10:47 PM
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That goes without saying. I would expect nothing less from a company that deals in investments.

What they are missing the fact that they are now in the public eye and perception is everything when they hand out bonuses. They did a lot of sneaky crap before so I don't understand why they couldn't find a way to keep this under the radar.

They need to be extra sharp and realize that they now have added responsiblities to the public that they did not have before. This is a distraction that will keep them from performing their jobs. I'm sure the calenders of the bonus boys are double and triple booked and now they need to add in meetings with their lawyers.

If my company can cancel the summer picnic and children's Christmas programs, then they can do the same and more. It's boot camp time for AIG but the public doesn't see it that way.
Funny thing about keeping it under the radar, they announced that they were going to pay those bonuses at the end of JANUARY. Folks only got their panties in a wad this past week.

But while your company can cancel its picnic and Christmas programs, if they were specifically in employee contracts, and had values worth millions, I bet you would view those canceled picnics and Christmas programs differently.

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post #68 of 86 (permalink) Old 03-18-2009, 10:56 PM
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Misuse of taxpayer funds.
Honoring a legal contract is not misuse of funds.

As much as we might find the amounts abhorrent [and I do], they are legal.

If the contract read "you will receive $500 for each year you have been with teh company as of 12/31/08" and the total payout was $240,000 there would be no questions whatsoever even though the principle was exactly the same.

The issue is simply the shocking amount. And they were in the contracts well before the wheels came off the cart.

The correct and appropriate thing to have done [because 20/20 hindsight lets you see this] would have been to say that all bonuses must be postponed until after all loan monies are repaid. That way the contract is still in play, would be harder to contest and AIG would be out of the middle. But Ben and Hank did not do that. And Barney and Chris did not insure that it was in the bill. And George did not think about it.

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post #69 of 86 (permalink) Old 03-19-2009, 06:38 AM
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Quote:
Originally Posted by mcbear View Post
Honoring a legal contract is not misuse of funds.

As much as we might find the amounts abhorrent [and I do], they are legal.

If the contract read "you will receive $500 for each year you have been with teh company as of 12/31/08" and the total payout was $240,000 there would be no questions whatsoever even though the principle was exactly the same.

The issue is simply the shocking amount. And they were in the contracts well before the wheels came off the cart.

The correct and appropriate thing to have done [because 20/20 hindsight lets you see this] would have been to say that all bonuses must be postponed until after all loan monies are repaid. That way the contract is still in play, would be harder to contest and AIG would be out of the middle. But Ben and Hank did not do that. And Barney and Chris did not insure that it was in the bill. And George did not think about it.
OMG! We are in a flagship Honda sedan!




I'm not even sure the amounts are abhorrent. That level of finance is akin to professional sports. You have to pay to win (consistently, except football with its parity where the superstar QB offsets a lot of other things). Do we complain when an actor gets millions to take a part in a film.

Not everyone can do what these people do and I would think it's the same in sports or movies. The star gets big $$$, doesn't make the playoffs or the Oscars but they still collect.

Where's the outrage?

Only in Baltimore. We're still smarting over Albert Belle.

Quis custodiet ipsos custodes?

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post #70 of 86 (permalink) Old 03-19-2009, 09:29 AM
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OMG! We are in a flagship Honda sedan!




I'm not even sure the amounts are abhorrent. That level of finance is akin to professional sports. You have to pay to win (consistently, except football with its parity where the superstar QB offsets a lot of other things). Do we complain when an actor gets millions to take a part in a film.

Not everyone can do what these people do and I would think it's the same in sports or movies. The star gets big $$$, doesn't make the playoffs or the Oscars but they still collect.

Where's the outrage?

Only in Baltimore. We're still smarting over Albert Belle.
For the most part I agree with you. But when I was a member of the corporate world and got a big, fat, bonus of cash and stock options, and then "retention" incentives, it was tied to performance. My performance against my specific goals, my division's performance against its goals for the corporation and then the corporation's performance measured against its goals. Complicated formula that basically said if I was a superstar and the corporation shit the bed, I got some shit strained through the sheets for a bonus. Or, if I shit the bed and corporation did well, I got the same strained shit. We all had to do well to get a juicy bonus. And if we all did better than planned, we got real juicy bonuses. But if the company went to Congress to beg for money to stay alive, I cannot imagine getting even a scent of shit as bonus.

So, I don't see how there is justification for bonuses here. And, I am not against paying for performance. I just don't see the leadership of this and the other financial companies taking bail out money as being particularly talented. They invented the tools that ruined their companies. How is that a demonstration of talent that needs to be retained and rewarded?

All of these corporations got caught up in a greed cycle. All of them knew they were adding risk to their company's "portfolio" of investments. All of them did it to raise their stock values quickly - because that is how their bonuses were increased in value the most. There is a fundamental problem when the officers of a company make decisions to synthetically inflate the value of the stock options they have to make their personal fortunes worth more instead of earning fees by adding value to some one who pays for the added value. It is a sanctioned Ponzi scheme. And the people getting the short end of the stick are the regular investors. The ones who pay the trading price of the stocks.

So, in this set of circumstances, I disagree with the analogy but only because there is no evidence the guys getting the big bucks are actually the superstars who are worth it.

Jim
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