Sunday, March 29, 2009

AIG Trader Writes Letter

Jake DeSantis explaining why he feels entitled to a $740K bonus (after tax!) rings a bit hollow. This article takes it apart pretty well. Basically he tells DeSantis:

1) There are only 400 employees in the AIGFP, with two offices. The statement you knew nothing rings hollow, because with that much money flying around, people talk about how it was made ($3.5B in last 7 years doled out to those 400 employees).
2) If you did know nothing, there is no reason to pay you $1MM to unwind these complex deals, which is supposedly why you are getting the big bonus.
3) You analogize that your plumbing work was ruined by an electrician that burned the house down. The plumber should still get paid. Not if they work for the same company.

I wish the government just let them fail, and we could avoid this. A capitalist can't whine about government messing with the free market when he is getting a bail out. Further, the AIG contagion effect is based on a domino theory that I do not buy. If you take out a bookie, don't be scared by notional obligations because the cancel out.


Anonymous said...

I think much of America is sick of bailing out a failed capitalist system.

They don't need the constant boom bust Or the constant inflation whittling away at everything they work for.

"They said" that it would lead to Ro-bust economics, seems like the only part they got right was "Bust" economics.

I'm sure we have a thousand excuses for why it isn't working. But like people who work jobs hear from the boss when they give out excuses. The key phrase here is "it isn't working"

Anonymous said...

I could care less about the bonuses. 99% of people care more about $200 million in bonuses than $200 billion in net bailout costs, and that is just sad.

toronto realtor said...

Yes, I agree with anonymous: million, billion, trillion - most people can't spot a difference. The bonuses are nothing compared the money used for the bailouts so far - trillions. Why don't the majority care about them?

Take care,

doug said...

Nobody went bankrupt. Why shouldn't all contracts be honoured?

If AIG did go bankrupt, where do employees stand? They would likely still get their bonuses.

Plamen said...

Disagree. Matt Taibbi is a hyperventilating ignoramus. Not to recap his Wikipedia entry, when he got into trouble for a badly received article on the death of the Pope, for example, he "suggested that the column was "written in the waning hours of a Vicodin haze." For crying out loud, he says that no one deserves $700K - that right there is enough to dismiss him as a jealous prick. In his little, red-colored, hate-filled world anyone can do financial engineering for minimum wage... and contracts mean nothing, as long as the blood-thirsty mob shrieks in approval. He says "For a guy like this, his worth as a human being is wrapped up in buying a bag of beans for $10 and selling it for $11." Sheesh, can we get more primitive than this - the bad, useless, gouging traders vs the producing class? And that from a guy who has written for Playboy. And finally, DeSantis did exactly what Taibbi suggests - take it like a man and resign. He just dared to explain why - but that's too much to handle for the former professional basketball player in Ulan Bator, Mongolia. Who is the whining b*tch here? I rest my case.

I fully agree that AIG should have been allowed to kick the bucket, with the full realization of the collateral damage involved. But, it was not, and the bonus sequestration is political dancing to please exactly the likes of Taibbi. How much do you want to bet that he would be all for taxing bonuses not at 90%, but at 990% - "hey, let's recoup some of those ill-gotten gains"? Who cares about contracts and private property when we can have fairness?

Eric Falkenstein said...

A agree that the critique is overdone, and his argument that anyone making more than $750k is silly. But I think he brings up some good points on why Desantis is unsympathetic.