# Bonuses For AIG **URL:** \ **Category:** The BBQ Pit\ **Created:** [March 15, 2009, 6:11pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541 "2009-03-15T18:11:24Z")\ **Posts on this page:** 20\ **Page:** 23
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [March 22, 2009, 5:16am UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/441 "2009-03-22T05:16:56Z")
More than actual evil intent, I’m getting a picture of interlocking mutual deception. AIG sold credit swaps that, in their eyes, would only become burdensome when impossible conditions arose. Like Daffy Duck selling the insurance policy that only paid off for an elephant stampede during a snowstorm on the 4th of July…Totally safe to bet a trillion bucks it won’t happen! Trouble is, fly in the ointment…the “impossible condition” was a downturn in the real estate market. Why would anyone think it was so unlikely? And even if it wasn’t likely, still unlikely, would you bet one of your kidneys at 10 to one odds to win a toaster? So, the math only works if they thought that a downturn in the mortgages underlying the Big Shit Sandwich was so close to impossible as not to be worth considering, it didn’t enter into their calculations. Which still leaves me trying to understand why anyone would think that. That has me stumped. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [March 22, 2009, 5:19am UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/442 "2009-03-22T05:19:17Z")
Comes the revolution I’m sure you and 'luck will teach those running dogs how to pose for gunfire, she gonzo? - XT ---
**Author:** ![SteveG1](https://avatars.discourse-cdn.com/v4/letter/s/bb73d2/32.png) [@SteveG1](https://boards.straightdope.com/u/SteveG1)\ **Post date:** [March 22, 2009, 5:25am UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/443 "2009-03-22T05:25:15Z")
I have to wonder about this. Is every last one of them EVIL? Don’t think so. Are there a few crooks here and there? Probably, just as in any other business. I just have problems with thinking that NONE of them are worth damn. That just doesn’t wash. ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [March 22, 2009, 5:25am UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/444 "2009-03-22T05:25:31Z")
> [@](#): > > …Comes the revolution I’m sure you and 'luck will teach those running dogs how to pose for gunfire, she gonzo?.. Nah. Six months at the Jane Fonda Aerobics and Re-Education Camp, then useful employment as _barristas_, bicycle messengers and day-care providers. ---
**Author:** ![China\_Guy](https://avatars.discourse-cdn.com/v4/letter/c/779978/32.png) [@China\_Guy](https://boards.straightdope.com/u/China_Guy)\ **Post date:** [March 22, 2009, 6:53am UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/445 "2009-03-22T06:53:19Z")
> [@Scylla](#): > > No. I got that directly from Liddy while watching him testify. Since they kept asking him the same questions over and over so each politician could get his own soundbite, I’m sure it is pretty easy to find in a transcript. Again, you gotta cite for that? I think you’re confusing Liddy agreeing to work for a dollar. Here’s what Liddy had to say about the people in [AIG FP](http://www.allamericanpatriots.com/aig/48750751-transcript-aig-chairman-edward-liddy-testifies-house-subcommittee): “Accordingly, today I have asked the employees of AIG Financial Products to step up and do the right thing. Specifically, I have asked those who received retention payments of $100,000 or more to return at least half of those payments." I know this is the pit and you probably don’t want to be searching for cites, but you made the claim and I don’t think it’s unreasonable for a cite in light of the fact that a casual search doesn’t show any news report that AIG FP traders are working for a dollar plus future bonus. Then again, if I get the time, I’m planning on starting a GD on TARP recipients and compensation. Would appreciate you joining that debate. ---
**Author:** ![clairobscur](https://avatars.discourse-cdn.com/v4/letter/c/839c29/32.png) [@clairobscur](https://boards.straightdope.com/u/clairobscur)\ **Post date:** [March 22, 2009, 10:20am UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/446 "2009-03-22T10:20:06Z")
> [@Scylla](#): > > It does make sense. What I think you are missing is that you don’t get returns based on what you had, or your starting point. You only get returns based on what you have: > > Start with 100K > > Year one you get a negative 50% percent return. You now have 50K. > > Year two you make 100% You now have 100k. See. Yes, that’s what you wrote in your previous post. So? The reverse of a 50% loss is a 100% gain. So, I still fail to see how it would show that bad years hurt you more than good years. In this example the bad year is exactly as bad as the good year is good. So, extremely logically, you end up with the same amount. You haven’t been hurt more by the bad year. Again, the only thing I see is that losing X% isn’t the same thing as gaining X%, hence that a year with a loss of,say, 30% isn’t compensated by a subsequent gain of 30% (or the other way around). But it’s just because the good +30% year isn’t as good as the bad -30% year is bad, not because a bad year will hurt you more than an equally good year (which in your example is a +100% year or in mine a +43% year). ---
**Author:** ![clairobscur](https://avatars.discourse-cdn.com/v4/letter/c/839c29/32.png) [@clairobscur](https://boards.straightdope.com/u/clairobscur)\ **Post date:** [March 22, 2009, 10:43am UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/447 "2009-03-22T10:43:50Z")
> [@Ocean\_Annie](#): > > Brief hijack- > > Here is the [link.](http://www.reuters.com/article/newsOne/idUSTRE52H2CY20090318) There has been talk about an alternative reserve currency for a couple of years, so I try not to get overly concerned. I think this time it might be different. > > I am short on time and have to run, but if you are interested, read the G 20 platform. It is clear which direction other countries want to go, especially the EU. Regarding the first article, it’s interesting and would probably be a good idea in the absolute, but I right now? I doubt it, and I doubt (maybe I’m mistaken) that many countries and/or institutions would want that now. Regarding the G20 platform, I just read the declaration made following the Washington summit ([here](http://www.g20.org/Documents/g20_summit_declaration.pdf) , warning : PDF) and there’s nothing there regarding currency reserves. I didn’t find the “platform”. ---
**Author:** ![clairobscur](https://avatars.discourse-cdn.com/v4/letter/c/839c29/32.png) [@clairobscur](https://boards.straightdope.com/u/clairobscur)\ **Post date:** [March 22, 2009, 11:27am UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/448 "2009-03-22T11:27:15Z")
> [@elucidator](#): > > Trouble is, fly in the ointment…the “impossible condition” was a downturn in the real estate market. Why would anyone think it was so unlikely? That’s what mystifies me the most. There has been many threads on this board about the looming downturn in the American real estate market during the recent years. Plenty of non-expert posters had voiced their concern on this issue. _I_ was expecting this downturn, and that it would hit severely the stock markets soon, and essentially solely on the basis of what I read on this board, both in economy-related threads and in mundane “I’m buying a house” threads in GQ and IMHO (of course, I didn’t expect such a huge hit, because I had no clue about what was going on in the backrooms. I thought that American families and banks directly involved in mortgages would loss a lot, that it would significantly harm American economy and that the stock markets would plummet all over the place, not that world economy would grind to a halt). So, how is it even conceivably possible that the management or major financial companies wouldn’t prepare for the possibility of such a downturn, when random SDMB posters were expecting it? I’ve only two explanations in mind : 1. They were complete idiots. It’s a possibility I don’t exclude, because the older I get, the more I realise that there are as much idiots at the top of the totem pole than at the bottom (\*), and that sheep flock behaviour seems to be as widespread amongst the supposedly knowledgeable and educated people than amongst the unwashed masses. 2. More likely : a “Louis XV mindset” (Louis XV being famous for having said “After me can come the flood”) . They knew this downturn was likely to happen, and contrarily to random SDMB posters they had enough informations to measure the possible extent of the resulting collapse, but kept going on their merry way because they had no interest and/or no incentive to plan ahead beyond the next quarter. And while I’m at it : I accuse the “short term mentality” that has been so prevalent during the two last decades, and so often criticized : “We want the highest possible return right now, anything else, including the viability of the company two years from now, be damned”. (\*) As an aside, that’s one of the reasons why I don’t buy into the concept that only an extremely small pool of highly talented people are able to run efficiently a company, and as a result those rare people deserve ludicrously high remunerations. The other reason being the saying “Cemeteries are full of indispensable people” ---
**Author:** ![China\_Guy](https://avatars.discourse-cdn.com/v4/letter/c/779978/32.png) [@China\_Guy](https://boards.straightdope.com/u/China_Guy)\ **Post date:** [March 22, 2009, 11:33am UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/449 "2009-03-22T11:33:23Z")
> [@clairobscur](#): > > Yes, that’s what you wrote in your previous post. So? The reverse of a 50% loss is a 100% gain. So, I still fail to see how it would show that bad years hurt you more than good years. In this example the bad year is exactly as bad as the good year is good. So, extremely logically, you end up with the same amount. You haven’t been hurt more by the bad year. > > Again, the only thing I see is that losing X% isn’t the same thing as gaining X%, hence that a year with a loss of,say, 30% isn’t compensated by a subsequent gain of 30% (or the other way around). But it’s just because the good +30% year isn’t as good as the bad -30% year is bad, not because a bad year will hurt you more than an equally good year (which in your example is a +100% year or in mine a +43% year). I think what Scylla means is that if you lose 50% this year, then you need to make double next year just to break even. It’s hard enough picking stocks that go up 50%, and it’s even harder to get a stock that will go up 100%. ---
**Author:** ![Grumman](https://avatars.discourse-cdn.com/v4/letter/g/43a26b/32.png) [@Grumman](https://boards.straightdope.com/u/Grumman)\ **Post date:** [March 22, 2009, 11:46am UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/450 "2009-03-22T11:46:21Z")
> [@China\_Guy](#): > > I think what Scylla means is that if you lose 50% this year, then you need to make double next year just to break even. It’s hard enough picking stocks that go up 50%, and it’s even harder to get a stock that will go up 100%. That works the other way, too. It would be very difficult to pick stocks that increase by 101%, but it is _completely impossible_ for a share in a limited liability company to fall by 101%. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [March 22, 2009, 12:57pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/451 "2009-03-22T12:57:39Z")
> [@Scylla](#): > > Traders? Yes. Probably more. And, they did not determine the bonus contracts. That’s also false. They controlled the bords with interlocking members, They determine who was on the compensation committees. Apparently they were able to write contracts guaranteeing boom time bonuses regardless of the financial debacle they caused. It is not false. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [March 22, 2009, 1:07pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/452 "2009-03-22T13:07:12Z")
> [@Fear\_Itself](#): > > I’m focused like a laser on your claim that if we don’t pay these bonuses, we won’t get the best possible outcome for the taxpayers. All the evidence says bonuses do not change that outcome. It is exceedingly naive of you to think these executives will respond differently to \*these \*bonuses than they did to previous bonuses. Do I actually have to explain what the word “Executive” means when discussing company management? The vast majority of the people getting bonuses aren’t executives. u ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [March 22, 2009, 3:40pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/453 "2009-03-22T15:40:17Z")
> [@RickJay](#): > > Do I actually have to explain what the word “Executive” means when discussing company management? > > The vast majority of the people getting bonuses aren’t executives. u Go peddle your pedantry elsewhere, Junior, the adults are talking. ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [March 22, 2009, 3:52pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/454 "2009-03-22T15:52:31Z")
Well, there could be a legitimate question contained within that word “executive”. The question would be if the people receiving bonuses were “executive” in the sense of being decision makers. I think we have a consensus that the decision making here was not real good. But I could have some sympathy for the guy told “Here is the decision, you get your bonus if you support the decision with special effort on your part.” Which is not to say that “have some sympathy” and “give him the money” are the same. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [March 22, 2009, 4:22pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/455 "2009-03-22T16:22:39Z")
> [@Fear\_Itself](#): > > Go peddle your pedantry elsewhere, Junior, the adults are talking. It isn’t my fault you’re ignorant. Yes, it’s an outrage that AIG and the rest of them have screwed up the economy. You still have to deal with FACTS, not fantasies of revenge, if you want to fix the problem. You do not have command of the facts. That this is the Pit doesn’t excuse stupidity. Goldman Sachs handed out over $10 billion in bonuses - most of it to actual executives - just a few months ago, **eating up most of their bailout money** , and there was hardly any public outrage. AIG hands out one tenth of one percent of their bailout, most of it NOT to executives, and people are going berzerk with rage. Fine, be pissed off. But here are the facts: 1. Berzerk rage is not going to solve the problem, 2. In fact, it’ll make it worse, 3. Focusing berzerk rage on one company that isn’t even close to being the worst offender is pointless, and 4. Since the U.S. taxpayer now OWNS AIG, tearing it down in the press is stupid. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [March 22, 2009, 4:45pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/456 "2009-03-22T16:45:12Z")
I will not be held hostage by the AIG “laborers” who run the company into the ground, and then threaten to leave before cleaning up their mess unless we meet their extortion demands. Rather than try to pass a tax bill, I would support issuing a subpoena to the CEO for the names of those who took the bonuses, and inform them that if the don’t give it back, those names will be made public, and leave it to their imagination which outcome is more palatable. That is how you deal with extortionists. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [March 22, 2009, 4:50pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/457 "2009-03-22T16:50:27Z")
It is not berzerk rage . It is directed at the perpetrators. They should be gone. Their culpability should have national exposure. The looters should be long gone. There are honest people who can do the work. I was an engineer. Do you think if my staff developed products that destroyed the customers factories, they would have me and my people get big bucks to fix it? Do you think my bosses would have escaped because they were not in charge of my division but merely hired them and provided no oversight? The whole lot would be broomed. The whole lot of AIG people should be replaced. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [March 22, 2009, 6:30pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/458 "2009-03-22T18:30:08Z")
> [@Fear\_Itself](#): > > I will not be held hostage by the AIG “laborers” who run the company into the ground, and then threaten to leave before cleaning up their mess unless we meet their extortion demands. Rather than try to pass a tax bill, I would support issuing a subpoena to the CEO for the names of those who took the bonuses, and inform them that if the don’t give it back, those names will be made public, and leave it to their imagination which outcome is more palatable. That is how you deal with extortionists. I’m curious… Do you know the meaning of the word extortion? Or are you seriously suggesting that it’s ‘extortion’ whenever a worker threatens to leave a company if it won’t meet its contractual obligations to that worker? And your quaint idea that these workers should be turned over to a mob indicates just how far from the path of reason and justice your thought processes have gone. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [March 22, 2009, 7:29pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/459 "2009-03-22T19:29:56Z")
> [@Sam\_Stone](#): > > I’m curious… Do you know the meaning of the word extortion? > > Or are you seriously suggesting that it’s ‘extortion’ whenever a worker threatens to leave a company if it won’t meet its contractual obligations to that worker? > > And your quaint idea that these workers should be turned over to a mob indicates just how far from the path of reason and justice your thought processes have gone. I suppose extortion refers to the mantra that the jobs is so so difficult that only the guys who did the looting are qualified to fix it. And that if you don’t give them huge salaries and bonuses they just wont fix the mess. They will be forced to quit . Of course AIG on your resume may not be a positive. Who would hire these thieves? Especially when other countries are fighting the same economic battle they caused. England put up an oversight board to keep an eye on the mess. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [March 22, 2009, 7:51pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/460 "2009-03-22T19:51:41Z")
Except they never said, “Pay us X or we’re leaving”. What they did was negotiate a contract LONG before there was any bailout. Now the government wants to renege. Actually, I’ve got a better example of extortion. That would be, “We’re not going to pay you what we agreed on, and if you don’t like it, we’ll turn your names over to this angry mob.” [Previous page](https://boards.straightdope.com/t/bonuses-for-aig/489541.md?page=22) [Next page](https://boards.straightdope.com/t/bonuses-for-aig/489541.md?page=24)