ELDER MUSIC: Classical Part 3
REFLECTIONS: The First Amendment

Of Bailouts, Bonuses and a Desperate Librarian

category_bug_politics.gif According to every newspaper in the land last week AIG, the insurance giant whose toxic derivatives went a long way toward causing our economic crash, has requested consent from the federal government to pay out $250 million in more bonuses to their executives over the coming nine months.

That's the same company our tax dollars bailed out to the tune of from $160 to $180 billion (depending on who you read, but what's $20 billion one way or the other) because someone said they are “too big to fail.”

A lot of the bonus money is scheduled to go to employees of AIG's financial products division – you know, the same guys who wrote those toxic derivatives. They must be paid these bonuses, the argument goes, because otherwise they would all resign and there is no one else – nobody in the whole wide world - who understands how to “unwind” the mess at AIG and get the company back on a sound footing.

Another argument contends that AIG is contractually obligated to pay these bonuses and – by god – we are a country of laws and blah, blah, blah. Come on. High-priced lawyers find ways to break contracts every day; these contracts are no more binding than any other.

None of the people who destroyed America's and good part of the world's financial systems are being held personally responsible but they certainly are being personally enriched with taxpayer dollars while everyone else falls further behind.

Case in point: this arrived from Alexandra Grabbe whom I visited at her bed and breakfast, Chez Sven, last fall. She found it on Craigslist:

“Retired librarian needs small furnished room from now til January (possibly longer if mutually agreeable); do not drive, so must be close to public transportation; am currently living at the Berkeley Residence, but the rent has gone up and my pension has gone down (tied to stock market), so I need a cheaper place to live until I can start collecting [Social Security] in January.”

The desperation in that Dickensian public notice rips at your gut and the librarian is not alone. It has been estimated that the market crash last fall wiped out $3 trillion in personal wealth with elders taking the brunt of the hit in a triple whammy:

  1. Lost life savings
  2. Forced early retirement due to the unemployment increase
  3. Lost value of homes

I don't mean to dismiss the hardship on young and mid-age people but unlike elders, they have time to recoup and recover - as we did in previous recessions when we were younger. At our age now, elders have no choice but to tighten belts and live out our remaining years in reduced – in some cases, hugely reduced - circumstances. There will be no recovery for old people.

Which brings me back to bailouts and bonuses. Consent of the federal government is not needed for AIG to pay the bonuses. According to reports, they have requested discussions on the issue with federal compensation czar Kenneth Feinberg only for “political cover” so to avoid the public rage that ensued following their last bonus round in March. If my gut reaction is any indication, it won't work – not that public rage will change anything.

The federal government has shown no inclination, so far, to regulate the financial industry (such as reconstituting the Glass-Steagal Act that served so well to protect us from the excesses of Wall Street after the Great Depression until Congress killed it). The new AIG bonuses are just a small, public glimpse into Wall Street's continuing business as usual, unchanged from before the crash.

Eighty percent of AIG and various percentages of other corporations may be owned by the federal government now, but that doesn't mean those companies are beholden to the public. In truth, the government is a wholly-owned subsidiary of the financial giants.

For a terrifying look at how the Washington/Wall Street axis works, don't miss this from The Atlantic. It will scare the pants off you as it has haunted me each time I have re-read it since its publication in May. Here is the introductory blurb:

“The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises.

“If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.”

So as the economy circles the drain, an old librarian seeks a furnished room in which to eke out a life while swindlers are awarded their ill-gotten gains. It is amazing how little has changed in 33 years and we are still as impotent as we were in Howard Beale's day:


At The Elder Storytelling Place today, William Weatherstone – Alzheimer's: Part 1.


Comments

First, Ronni, let me gently chide you for your use of the old fashioned term "toxic asset". The later take is for the assets to be called "legacy". Doesn't that make us all feel better?

I love your statement that, "In truth, the government is a wholly-owned subsidiary of the financial giants."

Perhaps we could all send that video clip, "Mad As Hell" to our president & legislators. Think it would help? Meanwhile, I'm going for a walk! Dee

To go along with this, Vanity Fair had an informative article on AIG: The Man who sank the world's economy. For anyone who thinks of Vanity Fair as a movie star magazine, check out its journalism pieces. There have been quite a few on the Bush administration but also explaining what went wrong in the financial sector and making it easy to understand for those of us not trained in economics. Most are online.

The retired librarian ad says a lot. Pensions tied to the stock market--what sort of madness is that?

I encounter seniors and elders in my volunteer job who are extremely constrained by their poor financial condition. Many are reliant on "charity" and/or government-run agencies for food, dental care, transportation. Our area is not elder friendly, having poor public tranportation and decentralized services. Of course in this recession/depression, tax-supported services are becoming vulnerable to budget cuts.

I think the description of the financial sector as an oligarchy is apt. Our government is tied to them, but seems also wedded to big Pharma and insurance. I do think it is up to us to communicate with our reps. We need to speak up more. (I mean me here.)

Like you, Ronni, I have trouble believing that "talent" is so hard to find that anyone couldn't be replaced for, say, half a million. Or half of that.

What is it that these people are so good at?

Oh yes, and many are like me with tiny SS because their jobs didn't pay in while they worked. Oh well, we were going to live forever. Remember? :)

I'm mad as hell and I don't want to take it anymore, but what choice do I have?

I hate injustice more than any one thing and this bonus thing gags me.

I just watched that film again not too long ago. It was true then and it's even more true now. I think it's time we stand up and take action. I wish I had an idea on how to do it other than bugging our alleged leaders.

I email my Congress kid constantly. Had I known that he was a protogee of Nancy Pelosi. I may not have voted for him. Then again, his opponent was bought and paid for by a local major industrialist long ago.

It's not just the banks and insurance companies -- it's all the big corporations who have moved our jobs out of the country and sold our future for their 30 pieces of silver.

I heard a businessman I know complain about the lack of employee loyalty today and he got really defensive that his company had shown damned little loyalty to our community and, in particular, to his employees. Our city has shrunk from 250,000 to 80,000 people. Our industry is gone. Even jobs at fast food joints are hard to get.

I saw the handwriting on the wall long ago and made damned sure my kids went away to college and told them not to come back here because there was no future here and it just keeps getting worse.


A lot of bashing of wall street. Deserved in large part. But, those people are often really smart, often hard working, and then just lucky to be born into circles that produce such people to fill jobs that many of us don't have the IQ, the stamina, the drive, and ambition to compete in (all qualities are required or you may not cut it). I like the days when a person could make a decent living and earn a nice retirement as a "laborer". I remember dad listed himself as such for many years. Next step down was "ditch digger" but even they had a roof, a decent car, etc. Not any more--there's lots of eager people that will work for $8 to $10 an hour and with no benefits. I'd like to have one of those wall street jobs but I'm not qualified! Most of us are not, so our lot is drifting ever downward because automation and computers etc make room for only the super workers I described earlier. Many of us face financial trouble if not already.

Consider too that the librarian actually contributed something constructive to society and you wonder why we can't come up with a bonus for her.

I got a Ph.D. when I was in my late 40s. I thought a career in the University would ensure work, unlike the failing newspaper industry in which I'd been for nearly 20 years.

I did not earn tenure because my research -- some of it for a colleague with a NIH grant on genetics communication - was not deemed appropriate. A younger man whose research consisted of surveying pornographic gay websites was a favored son, however.

I have worked only part-time for the last 15 months, so my hard work in school means nothing.

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