AIG Bailout AIG Payout

Monday, 16 March 2009 05:51

Madoff's Victims List  <		>   Putting losses in perspective

So we’re up 600 points in the market and it seems like things are getting better and better. Why do I say this? Well remember those pay packages and bonuses that were given out in the good ole days? Well yeah those are still going around. No, it’s all good you see because these were bonuses that were promised before the economy decided to try out for next Olympic diving competition. But when we take into consideration basic economics and market principals in order to keep an organization profitable, an organization needs talented people. However, these talented people do not come to your organization without an incentive. This incentive could be in the form of branding, experience, and, of course, pay.

The idea is, in order to make American International Group (AIG) profitable again after their dismal collapse in 2008, they must keep their most talented performers. This translates into a $165 million bonus, which mind you, was promised the year before last. Contractually and legally (of course not ethically duh) these bonuses are binding and nothing can be done about them (except piss tax payers off). Just recently, taxpayer money has bailed AIG from implosion, after AIG lost over 95% of its share value.

Well of course, right after the September bailout in an effort to keep those, oh so highly valued employees, AIG executives were treated to a fantastic California retreat costing a mere $444K (of course spa treatments, banquets and golf was included). The bail out money from the Federal Reserve was paid in installments, not a lump sum. Therefore, it would seem that multiple trips were also paid to the executives in installments (it only seems appropriate). In October, AIG executives spent $86K on an English hunting trip. Now, these trips came right after the $85 billion and the $37.8 billion bailout installments, respectively (notice the larger the bailout, the larger the trip; it makes complete sense). Such trips continued throughout the coming months, after each consecutive bail out. After the November bailout of $40 billion, AIG executives received another incentive trip installment of $343K at a resort in Arizona. So far, perfectly proportional to the bailouts (your money).

So you see America, our money is being well spent in upholding the basic concepts of supply, demand, and incentives. Hmm, something seems missing in the analysis; COULD IT BE THAT ACCORDING TO THOSE VERY SAME PRINCIPALS OF ECONOMICS, AIG SHOULD HAVE GONE BANKRUPT? HMM…



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