American International Group

Cranking up the outrage-o-meter

The outcry over bonuses at AIG is complicating efforts to stabilise America’s financial system

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Readers' comments



The Economist objects to outrage at the AIG bonuses not because that outrage is unreasonable, but because it delays a return to the usual Ponzi 'normality', which caused the crisis in the first place.

Madoff, Wall Street and the AIG bandits understand the system perfectly: it is about stealing other peoples money and efforts.

large hadron

I notice on a lot of these posts that many people say "let AIG fail", and that shows a clear misunderstanding of what institutions like AIG actually do. The "They cannot fail" line is used not because the government wants to help AIG employees keep their jobs. Rather, the success of companies like AIG keeps you from losing your job. When AIG fails, the money they paid out to their counterparties (who themselves are taking on losses) dries up. The chart in the article clearly showed the large banks that were under AIG protection. It's like an insurance policy for these banks. But if they have no money from AIG, then they stumble and eventually fail too. Now every business that those banks lent to has no more money coming in (i.e your employer) and they too fail. If you say "that's fine, they were foreign banks and I don't do business with them", understand that many but not all large banks collapsing would lead to such a crisis of confidence that all banks would falter. (Consider that our current situation was brought on bascially by the collapse of just one, lehman brothers) The systemic nature of the crisis is really quite plain to see. I dont understand how people think they are correct in saying "let them fail!". Thats nothing but populist rhetoric; good for the people's hurt feelings and little more.

Tom Silo

Failure was and still is the answer. But to ensure those who made the right decisions and have managed their business well don't fail too they should have guaranteed the account holders(all, not just those below $101k) and all debt holders where there was an explicit or implicit guarantee that the debt would be paid back. So the only difference between this and any other company going broke is that you make sure the financial system remains robust with government guarantees- but not to the institution and owners who made bets at the roulette table, to those who had a reasonable belief the loans made were done with proper regulatory oversight.

Eg, Citi goes bust, but banks who have provided short term loans and all account holders get paid. All holders of Citi funds and all shareholders get what's left after the sale of the assets (in that order). Just let GM go bust - it should have years ago....

In short, why do we get it and the people elected and paid to solve it (and not to mention KY Nancy's private jet she flies around the country at tax payers expense) don't? Worse, they seemingly can't even make a coherent decision!

Let's just look at what advice we gave Asia during the Asian financial crisis - and do it!

Market Matador

Obama blew 150 Million Bucks on his inauguration whilst telling the American People that “We must all make sacrifices. The road ahead will be steep and hard”. He strikes me as a person reading a speech that has been written for him whilst having no idea what all those words actually mean. He’s the sort of person who says “We must eat healthy”, whilst polishing off his fourth Big Mac. Bush was gracious in his last months and Obama and his so-called ‘Economic Team’ (I prefer ‘The Gang That Couldn’t Shoot Straight’) has been running the show a lot longer than 60 days. I don’t want to accuse the President of moral cowardice, but to repay this graciousness (Obama and his ‘Team’ have been calling the shots and making the economic decisions since the beginning of the year at least) by this cheap tactic and to keep hiding behind “We inherited this mess (smirk smirk)” at the same time that his ‘other personality’ is telling us “I accept responsibility; the buck stops with me!” tells me that America (and indeed the free world) is leaderless and rudderless with an inexperienced, confused and disingenuous Captain up on the Bridge even as the Perfect Storm intensifies. He doesn’t even seem to know where we are ... much less where we need to go.

If the whole financial system collapsed and half the people in it lost their jobs (wish it would be the TOP half; why is it always the bottom half who lose their jobs; companies should lay off from the top down; the CEO should be the first to be laid off), it’s actually the best thing that could have happened to America and indeed the world. It’s like having a gangrenous foot and having it drop off, saving you the trouble of amputating it. But the economists on TV almost universally say “We couldn’t let AIG fail”. YES WE COULD HAVE! Just think of it folks. If we had let AIG fail, and all those economic experts on TV had lost their jobs consequently, what a better and more competently-run world it would be. Where does the road that they (Mr. Obama especially) have embarked upon lead eventually. It leads to a breakdown in the compact between government and governed, between citizen and state. To a fracture in the social contract also. To social unrest and upheaval. Maybe even to revolution. Talk about hard choices. Either let AIG fail ... or watch the whole USA fail. Should be an easy decision for anyone who loves his country. Mr. Obama has made every single wrong decision along the way, hasn’t he? And I expect that for the next four years, all we will hear from this youthful Emperor is “I inherited this mess”. Didn’t he know it was a mess when he ran for office? No? Didn’t he know ANYTHING ... when he ran for office? No?

Genghis Cunn

Democracy depends on the masses believing that all parties receive fair and reasonable treatment by government. The gross payments to AIG execs and the UK's Goodwin threaten this compact. It is better for the long-term that they are dealt with as a moral issue even if this detracts from rescue measures in the short term.


We should have taken the Capitalism route and let AIG, Freddie, Fannie, and Citi fail. No bonuses at these firms. Let the other firms on the Street take the losses. Probably no bonuses for them either. Want Capitalism? Sure, half the people on Wall Street would lose their jobs. No problem with me.

The Wall Street culture needs to collapse and this was the best chance we had to reboot our financial system. Why did we bother spending our precious taxes go to these stupid firms that made the wrong investments? Let them take the fall. Instead of complaining about bonuses, they would've been begging for jobs.

Tom Silo

You cannot go and change the past - it is unconstitutional and for good reasons.

The mere fact these politicians are competing for the most vociferous condemnation of any payment made to anyone demonstrates how poor the leadership has become in both houses of Congress from both parties. Additionally it shows a total lack of understanding of the law, of moral principles, of the financial system and even borders on the corrupt. Just look at Nancy Pelosi - she flies in her own private jet that is financed by the tax payer! And maybe if the Democrats didn't force Fannie and Freddie to collateralize debt from low doc and alt-a mortgages we wouldn't be in this mess! To paraphrase Shakespeare - "I think they complain too much".

No, the issue isn't bonuses, the issue is that the Democrats were complicit in the financial issues at hand and cannot just blame Bush. They had a long runway before Obama was sworn in where they said they were working on the solution, Obama gets in and despite campaigning with incessant rhetoric throughout the campaign on cutting pork and fostering bipartisanship he throws the work to Nancy and her crew who produce almost 9,000 earmarks (granted almost 40% were from the Republicans) and not a single vote from the Republican party. Obama himself demonstrated his keen bipartisan leadership skills in producing words like “the [Republicans] have presided over the financial disaster that is here today and hardly have the moral authority to tell us whether we have it correct or not!" Here we are over 60 days post inauguration and we have no real plan or leadership demonstrated and then it comes to light the Democrats changed the wording in the bail-out package to protect bonuses. In the midst of all this the public are understandably getting bail-out fatigue and we start to see a plunge in Obama’s polling numbers.

Now the Democrats find the public is angry. But the Democrats are suffering from the same delusion the bankers were – they cannot accept reality. The reality is they are complicit in the financial crisis and are now making it worse. The old mantra “Blame Bush”is being revealed for what it always was; an over simplistic populist farce. The Democrats are in denial and consequently they are lashing out at every phantom issue with populist rhetoric.

What should happen is the government should let every organisation that will go broke go broke. They should offer a 100% guarantee to all account customers (including about $100k), bond holders and lenders and let the shareholders try and gain some compensation after the company assets have been sold and the government is paid back in full - if there is a gap, well, bad luck to the shareholders. It is the owners who let their management teams give away money and bonuses in such extravagant ways, it is the owners who own the risk. It might just take something like this for all owners to finally take ownership of how the company is run instead of leaving people running the asylum decide how they want to pay themselves.

Yes, unfortunately the Democrats have demonstrated their inability to manage anything. This is their particularly worrying as it the main tenant of their party that more government intervention is a good thing.

It is not surprising that Obama is finding it difficult and making a lot of mistakes. The only surprising thing is that the people who elected him did not expect this.

Yankee Doodle

Market Matador wrote: "Not wishing to contradict anyone but ALL of the AIG bonuses went to people who most certainly DID create this mess by sheer greed and staggering incompetence."

Really? If you support this from a reliable source THEN I will agree with you.

Now that we discussed this fact we now can get back to the political hashing of what didn't actually occur.

Market Matador


Yup! Blackmail, blackmail and more blackmail!
And at the end of the ‘Chain of Blackmail’, the source of all the money that Blackmailer A is paying to Blackmailer B who in turn is paying to Blackmailer C, is the US Taxpayer. Let’s call him (or her) S for Sucker. Being at the end of the chain, S can’t find anybody to blackmail to recoup his losses. All S can do ... is get mad enough to bring the entire ‘House of
Cards’ crashing down into the Coliseum, the way Sampson did. There’s one more thing S can do. S can’t blackmail anyone but he can take hostages. S can take the Senate and the House of Representatives hostage threatening to kick them all out if he or she doesn’t get a slice of this ‘Blackmail Money’ that’s going round and round in a circle on the Monopoly Board, with none seeming to come his way even when he or she passes Go. This is S's only defence against being deleveraged out of the game entirely. It’s like a remake of the Godfather, with
Barack Obama playing the role of Marlon Brando. But even the Costra Nostra operate with some kind of a code, and in this game nobody has any morals, principles or code whatsoever.


Don't fret, the colonialists have run amok ... but don Quixote is in the White House.



Yup! The very people the scam masters who design this system cashing in no matter when it raise and fall. Because they are the ONLY ONES who can fix it. The trap is designed to manipulate and dominant the world's economy.

They hold the U.S.A hostage, they hold Obama hostage, they hold the Americans hostage. And of course the U.S government now holding their creditors hostages too. If you don't continue to lend my the dough, I'll print like hell.

The same trick like those wicked contractors you hired to build you house. They dig a freaking gigantic hole in you yard, then they go somewhere else to dig another hole and disappeared for a while. Finally you get them on the phone. Then they tell you "We go a problem at hand the ground is very troublesome. We need this much $$$$$ to get started." You kind of doubt but believe them and agree to pay. Then the trick elevated as the construction progressing. More problems they discover and more money they demand. Your budget from $200,000 increases to $600,000 and likely will be much more as days go by.

If you don't pay them they'll tell you they can't work for you anymore. You have to find someone else to finished rest.

Black mailers
con artists
Ponzi masters


Market Matador

Liddy charges $1 in salary at AIG. Probably a few million in other perks but $1 in salary. OK, I'll do the job for 50 cents. Appoint me CEO immediately! I'll not only fire the whole lot of BLEEPS ... I'll call in the FBI and have them all arrested. And I'll also take only HALF of what Libby's other perks and privileges and options are. Don't be FOOLED any more, people. You got it right at last. You woke up and smelled the coffee finally. These people are riding you like a horse on the Prairie. They don’t care less about you or your family. To be mad-as-hell you have every right to be.


Do doubt. AIG is the epicenter of the current financial meltdown. Those who received taxpayer funded bonuses are the very people who caused this financial crisis. The more they take risk, the more they get bunus.

Their reckless holistic risk management caused all this financial system mess. The more they use voodo risk management techniques such as monte carlo and cds, they get more bonus. They should be arrested and sent to Abu Gharib and Guantamo bay camp. They are the places where financial terrorists should belong!

Market Matador

In fact, many of them threatened to leave and help the competition sabotage AIG using their special knowledge of the ‘Toxic Assets’ and ‘Radioactive Derivatives’ at their Financial Division (a Hedge Fund Division actually) at AIG. This is economic terrorism and they should all have been arrested, not given bonuses.

Nobody should defend these bonuses, the people who got them, or the people who gave it to them (Obama, Geithner, Congress, etc). If the President really meant what he said about ‘taking full responsibility’, he would at least shave his head and look a lot more sorry. And for God’s sake Mr. President, STOP SMIRKING like a schoolboy on his first date. “I take full responsibility” (smirk; smirk). “The buck stops here” (smirk smirk). “I’m the one you should hold responsible” (smirk smirk). This President is becoming more annoying than the last one.

Yankee Doodle

None of these bonuses went to any of the people who made the mess. There are all sacked now. It went to get people to replace them. How much would it take to get you to quit your high paying job move to NYC and then work for AIG today? (Remember a small NYC apartment rents for 4k monthly.)


Market Matador

The average bonus for a Wall Street employee in 2007 was more than $180,000, but top employees make much more. Lloyd Blankfein, the chief executive of Goldman Sachs, topped the charts, collecting a salary of $600,000 -- and a bonus of $68 million.

It's your taxes that are paying all this now people.
Slave Economies like this existed back in the Year BC,
The History Books tell me.

Market Matador

"Best lesson are learn from suffering."

ricecake ... You're sure right about that, McGarrett.
People who've had none know the value of money.
They don't just chuck it away carelessly.
At another Thread here at The Economist,
People pointed fingers at China for saving too much,
Instead of complimenting their thriftiness and such.
It's like a criminals' convention where they lambast honest people and say it's all this danged honesty causing the commotion.
That it has nothing to do with their criminality,
Or lawless deeds of every persuasion.
Instead of investing in America,
Maybe China ... should just BUY America.
[If that happens, first thing they should do is fire everybody.]
The price is falling every day.
Before long they should be able to get it for a song and tow it away.

Market Matador

We-The-People are are smarter, better informed, and better able to smell coffee than any of the leaders at the White House or elsewhere in Washington D.C.
We're certainly more able, more skilled, more honest and more good-looking too, baby ... than anyone at AIG!
Take Liddy. They say "Poor guy's working for nothing", these bleeding hearts on the TV. Yeah right, if you believe there aren't tons of perks and other 'hidden income', then I have some Oceanfront Land in Arizona I'd like to sell you.
"Who'd do his job?" they ask.
How come nobody offered it to me.
I sureasHell'd fire everybody.
Not write to them asking them to return 'HALF', so pathetically.
Liddy is part of the problem and NOT part of the solution, believe me.
The guy's as hopeless as hopeless can be.



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