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Both Sides of the Fence

A Tosa resident since 1991, Christine walks the dog, cooks but avoids housework, writes and reads, and enjoys the company of friends and strangers. Her job takes her around the state, learning about people's health. A Quaker (no, they don't wear blue hats or sell oatmeal or motor oil), she has been known to stand on both sides of the political and philosophic fence at the same time, which is very uncomfortable when you think about it. She writes about pretty much whatever stops in to visit her busy mind at the moment. One reader described her as "incredibly opinionated but not judgmental." That sounds like a good thing to strive for!

Let them eat credit default swaps

AIG, Economy, Politcs

The New York Times continues to point out that people -- and by people, they seem to mean all people, not just effete liberal New York Times readers or their opposite rough-edged numbers in Dittohead radioland, but the whole lot of us – really are feeling very cranky about the AIG bailout. 

 

Seems we don’t like our money going to bonuses for the guys who made some really bad and shouldda-been-illegal bets – and lost. When AIG chairman Edward M. Liddy whines that he can’t keep these people around without such rewards, most of us wonder why he wants to.

 

That, or why they aren’t forced to stay around and fix things as a restorative justice project while they are doing serious hard time.

 

Why the Times is surprised by our unhappiness, I can’t imagine. The whole sorry mess has bleeding heart pinko-liberal pacifist types like me shouting “man up!” at Treasury Secretary Timothy Geithner and wondering WWDCD (What Would Dick Cheney Do)?

 

Certainly he wouldn’t be put off by a bunch of over-dressed Wall Street lawyers sniffing that the law demands paying bonuses to these “most skilled executives.”

 

“Law?” Cheney’d say, along with David Copperfield’s Mr. Bumble. “The law is a ass." And it doesn’t make much sense, considering the circumstances.

 

Only this time, we’d nod and say, “Umhmm. That’s right, brother. You tell ‘em.”

 

It’s hard to imagine what those AIG employment contracts say, exactly, and why they are so ironclad. I know I plan to write into my own next contract: “pay this woman scads of money even if what she does destroys the company, the free and not-so-free worlds, and, possibly, the universe. Because that's how we'll know she's irreplaceable.”

 

AIG's best and brightest are getting their bonuses for creating “credit default swaps.”  As far as I can figure out, financial institutions pay someone else to assume the risks of loans they’ve made. Then they make small payments on the “insurance” they’ve purchased, instead of bothering with annoying obstacles such as having actual reserves.  Then they take the big debts off their books, which makes it look like they have more reserves than they do, which makes them look like a better risk, which. . . well, you get the idea.

 

So I suggest we work out another kind of swap. The US Government takes over the bonus payment legal obligation directly. Only instead of using taxpayer cash, the bonuses get paid by “credit default swap.”

 

I’m not sure exactly what that would look like. But we’ll hire the world’s most brilliant mathematicians and scientists to figure out the details. Since they’re already working for AIG, they could do their Huber time on the project.

 

AIG will insure the value of the promised bonus amount, backing it with the same amount of reserves they’ve been using. Then we’ll take the debt off our books without actually having to pay more than the insurance policy payment.

 

A person could get carried away with that kind of thinking. Oh wait: they already did. . .

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