Hard Light Productions Forums
Off-Topic Discussion => General Discussion => Topic started by: Solatar on March 18, 2009, 09:08:46 am
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I'm sure you've all heard about AIG paying out bonuses to many of its employees. Didn't see a topic so I made one myself.
I was under the impression that bonuses, a form of profit sharing, were given out when a company was doing well to "reward" a lot of the management. Any thoughts? The story seems fairly straight-forward (bailed out company pays bonuses) but I can't help but think it might be a little more complicated.
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Trouble is, these bonuses are written into their contracts, while 'calamitous government rescue' was not. Therefore they are legally entitled to millions of taxpayer dollars under their current contracts, which if denied them, will end up with AIG being sued.
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Pay them the bonuses. Then sack them and hire someone competent. :p
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The first thing that would make me feel a little bit better towards them if they’d follow the Japanese model and come before the American people and take that deep bow and say I’m sorry, and then either do one of two things — resign, or go commit suicide.
http://www.politico.com/news/stories/0309/20083.html
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He does have a point though. There's no "I'm sorry"; just "if we go down the economy will go with us! you better save us!".
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If they are contractually obligated to pay them, it is called "wages," not "bonuses." How can a "bonus" be considered compulsory even if the company is tanking? My opinion, tell AIG they can either face being sued by the federal government for gross misuse of public funds or they can tell the fat cats they paid off to go screw themselves and give that money back to the people from whom it was given in good faith.
With layoffs hitting every industry, no one anywhere should be getting bonuses this year. I got mine last week, two days after four of my buddies got laid off. I felt physically sick then, and I still do. I have an overwhelming urge to write a check for my bonus and tell them where to shove it, but if I make myself a target for the next wave of layoffs, I have no where else to go. Goddamnit how many good people could have been kept if my company hadn't given out bonuses this year? Everyone I know who is still here has said they would have given them up!
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"Well guys and gals, we certainly did a fine job of running our company right into the ****ing ground, now let's celebrate for a job well done!"
I'm sorry, but I'm on the "no goverment bailouts" bandwagon, especially since the one I was for (under saving the automobile industry) turned out to be BS when GM decided that it would invest $1 billion into operations in Brazil. That's going to save American auto-manufacturing jobs HOW?
If they are going to reap the rewards of capitalism, then they should suffer the consequences once they screw up and let new blood come in and rebuild.
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This just in, AIG will be split into divisions during the course of four years from now...
Also, Finnish Broadcasting Corporation's news page is faster than BBC and CNN...
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That's going to save American auto-manufacturing jobs HOW?
We are on the same continent thus that does save American jobs. :p
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I do see some of what the new CEO or whatever you call him is saying. There were 3 divisions. People from 2 of them that caused the problem got sacked. The other one isn't doing bad and they got the bonuses.
I do not see any reason anyone should ever make over 100k in a bonus unless they aren't getting paid in the first place and their bonus is their pay and based on performance. Even then over a million? Come on. No one is worth that kind of money. Heck if I made a million for 5 years straight I'd retire and never look back. Scary thing is if these guys knew how to invest in the first place they would have worked for less. put the money into the right places, and lived off the interest the rest of their lives instead of running a company into the ground.
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If we didn't bail out any companies at all, think about how many jobs would be down the tubes.
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Well if a job goes down the tubes, then these people can start selling used panties at a high rate on ebay. Worn for at least 24 hours and not washed :lol:
Or move to more lucrative things like marijuana. A couple of my friends stay alive from the proceeds of dealing their crop of weed. Maybe nuke would know something extra about this?
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Pay them the bonuses. Then sack them and hire someone competent. :p
Pay the bonuses, and then charge a 100% tax over it ;).
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PAY THE BONUSES!
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Negative on the bonuses. It's about time ailing companies finally took some responsibility for their failures. Where were the government bailouts for countless other companies that have gone under already? How come the Wall Street executives can still get their fat paychecks after the monetary clusterf**k that started this disaster? And more importantly, why can't the government just throw me about 5 million dollars? They've already "spent" almost $1.2 trillion already (about $4000 for every man, woman and child in the US). The whole idea of "spending money we don't actually have" was a major contributor to the Great Depression, and it's certainly a major contributor to today's downturn.
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Well if a job goes down the tubes, then these people can start selling used panties at a high rate on ebay. Worn for at least 24 hours and not washed :lol:
Or move to more lucrative things like marijuana. A couple of my friends stay alive from the proceeds of dealing their crop of weed. Maybe nuke would know something extra about this?
well i did know an award winning grower, he gave me some good tips on killing mites and explained how to completely automate a hydroponics bay. i know lots of stuff about lighting and what materials to use in construction. and his #1 tip was to miracle grow.
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It's quite simple pay the bonuses, but in 1000 years with a negative interest rate! If they would have run the bank properly, then it would have had the money to pay them, the government loan should go to pay the general public out!
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I believe these are called retention bonuses. They sign a contract stating that if they work until a certain date, they are entitled to a bonus.
Lets put some perspective on this though. AIG received 170,000 million dollars, or 170 billion in bailout cash and everyone is focusing on 150 million of that? Why isnt anyone else pissed that they got that much money at all from the government and doesnt anyone care what they are doing with the other 169,850 million?
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Its the government's fault really. They gave AIG and the rest a bunch of money, with no strings attached. If they didn't want the money spent on corporate bonuses, they should have stipulated that. But they didn't. So AIG can spend the money however they want.
Also, AIG is contractually obligate to pay the bonuses. Its a situation where they are damned if they do (by populist politicians) and damned if they don't (lawsuit brought against them for breach of contract).
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If they don't pay the bonuses, you'll basically have every single employee who had it in their contract suing the company. So what happens? They end up spending $5b to settle every contract they breached. If AIG and an individual agreed to be employed for 5 years at a minimum and they've only been on the job 2 years, the employee has the right to sue for the remaining 3 years worth. Now multiply that by a few hundred people with good lawyers and you end up spending a whole hell of a lot more money on this issue.
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From what I understand, the House is currently drafting a bill which taxes any bonuses handed out by a bailout-recipient to the degree of 90%.
That just makes me smile.
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From what I understand, the House is currently drafting a bill which taxes any bonuses handed out by a bailout-recipient to the degree of 90%.
That just makes me smile.
But the issue is that these contracts are clear and concise. Does government have the power to alter contracts between two individuals? I think not. In fact, if the Federal Government granted itself the right to alter contracts, I trust that the vast majority of people would be in open revolt. Anyways--if their contracts say the bonus will $xxx,xxx amount and the individual only receives $xx,xxx amount, then the contract has been broken and the individuals effected by it can, again, sue for the value of the contract. And most of them would.
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From what I understand, the House is currently drafting a bill which taxes any bonuses handed out by a bailout-recipient to the degree of 90%.
That just makes me smile.
But the issue is that these contracts are clear and concise. Does government have the power to alter contracts between two individuals? I think not. In fact, if the Federal Government granted itself the right to alter contracts, I trust that the vast majority of people would be in open revolt. Anyways--if their contracts say the bonus will $xxx,xxx amount and the individual only receives $xx,xxx amount, then the contract has been broken and the individuals effected by it can, again, sue for the value of the contract. And most of them would.
They aren't really changing the contract. They're just taking a big bite out of the monies being paid.
I kinda like that 90% there. A $100 million bonus becomes $10 million. And the poor overtaxed executive can cry all the way to the goddamn bank.
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(http://imgs.xkcd.com/comics/1000_times.png)
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The point is not how MUCH bonusses, the point is that there where any bonuses given at all.
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This is theft. they where promised the bonuses, now the government stole 90% of it. if the government didn't want them to get the tax-payers money, they should have put in the original bill that the bail-out money wouldn't pay for the bonuses.
again, this is theft. it maybe theft from the rich but it's still wrong.
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This is theft. they where promised the bonuses, now the government stole 90% of it. if the government didn't want them to get the tax-payers money, they should have put in the original bill that the bail-out money wouldn't pay for the bonuses.
again, this is theft. it maybe theft from the rich but it's still wrong.
The ends don't always justify the means. But in this case they do. I disagree, sir. I'm not going to support that argument, by the way.
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This is theft. they where promised the bonuses, now the government stole 90% of it. if the government didn't want them to get the tax-payers money, they should have put in the original bill that the bail-out money wouldn't pay for the bonuses.
again, this is theft. it maybe theft from the rich but it's still wrong.
I think very much true. The issue here is that the government overstepped its bounds by interfering with contractual agreements. Do realize that many of these people are being fairly compensated for the work they do--not all of these guys are baddies who ran their company into the ground. And realize the reasons that the companies have been run into the ground... lending standards across the board plummeted. Either join in or piss off your investors. That's the only issue really--the stockholders would be pissed out when these companies don't perform "at par" with other banks. And then the other thing is they're taking risky investments almost everywhere. Not all risks are bad risks. They did make a good bit of profit while at the height of the bubble, but I don't think it was solely their fault and I don't think we should now punish their employees. Have an inquiry for God's sake and try to determine WHO was at fault for so much of this. AIG is solvent and so are basically all other banks--they'll stand until the market unfreezes and people feel that it will only go up. We're not at that point right now, but that point IS approaching.
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If we didn't bail out any companies at all, think about how many jobs would be down the tubes.
And how many more would open?
you can't "stop" the market. As long as there are people around, goods will be bought and sold.
that "if we go down everything goes down with us" is mostly crap. a new company will opo up to fill in the gap the second another one stumbles.
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If we didn't bail out any companies at all, think about how many jobs would be down the tubes.
And how many more would open?
you can't "stop" the market. As long as there are people around, goods will be bought and sold.
that "if we go down everything goes down with us" is mostly crap. a new company will opo up to fill in the gap the second another one stumbles.
Correct TrashMan. And that company would learn from the other, failed company and not do as badly as the other one, or it would go under like the one before it. And that company that didn't go under would be paying people to work for it.
I'll be honest and state capitalism is a brutally Darwinian process by which only the best, most successful businesses survive. And the best, most successful business offer lots of paying jobs. I'm not in favor in a monopoly by any means, since a monopoly is a distortion of the free market and an inhibitor of competition. And competition makes sure the best survive.
An important thing to remember here is that demonizing Big Business is like shooting yourself in the foot. They are the ones who provide the well-paying jobs and make the foundations of a successful economy possible. By paying people to work for them, and then they go out and spend money, which goes to pay for other people's jobs. And if it wasn't for the tax income corporations and small businesses provide, not just in the form of tax income on them, but on taxes on all their workers' income and taxes on their products, the Federal and state governments would have almost no money on which to operate.
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TrashMan and SpardaSon21, welcome to the Republican school of thought.
If not for the global crisis, I'd enjoy watching AIG shrink, and dozens of other companies grow beyond what they even dreamed of to fill in the void it left behind.
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If we didn't bail out any companies at all, think about how many jobs would be down the tubes.
And how many more would open?
you can't "stop" the market. As long as there are people around, goods will be bought and sold.
that "if we go down everything goes down with us" is mostly crap. a new company will opo up to fill in the gap the second another one stumbles.
Good plan. They can use all the expansion capital that the worlds banks are going to be super willing to lend them. After all, the biggest player in their sector just went under - that's a brilliant time to forge a partnership with a junior looking to expand by lending them millions and millions of dollars.
So clearly, everyone would walk out of jobs with AIG and into jobs with these newly massively expanded smaller companies who'll be crying out for new staff. It's not like there'd be months or even years of delay between the closure and the expansion during which all those workers would be unemployed.
Finally, someone with good common sense and a firm grasp on the realities of the all knowing, all forgiving, all loving realities of a market economy. :doubt:
The problem, you see, with taking a purely darwinian, red in tooth and claw view of a situation like this is that a company isn't some nebulous idea that money flows in and out of, where the consequences of its failure are limited purely to the effects it will have on other companies. They're people - employees, subcontractors, clients, etc. etc., not to mention the families and dependednts of all those people. You let a big one die and yes, sure, it'll probably let other, possibly better managed companies grow and expand to fill the market void. But it takes a lot of people down with it. And those unemployed people in turn can't afford to pay their bills, or buy stuff or participate in the economy in a meaningful way. There's a domino effect that can have serious repercussions, especially with big companies. Ask yourself, for example, what would have happened to all the clients - big corporate clients - if AIG had folded and they'd not had public liability insurance, or workers medical insurance or whatever anymore. They'd have to choose between exposing themselves to lawsuits or stopping work, and a lot of them would choose to stop. Another great big ripple efect from that too. There're dozens of things like that to consider - there's so much more that pure market darwinism to consider.
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@ Black Wolf:
Why do you assume that all AIG employees would sit on their @$$es and do nothing for many months until another company takes AIG's place and rehires them?
It's not like they're incapable of working anywhere else. :p
Hell, many would probably leave the insurance industry for good and be happy about it.
I do agree with the second part about contractors, subcontractors, etc. who would have trouble if a big company fails (at least until they find new customers).
Ask yourself, for example, what would have happened to all the clients - big corporate clients - if AIG had folded and they'd not had public liability insurance, or workers medical insurance or whatever anymore. They'd ...
... go to someone else to buy insurance, and be back in business the next day. Hell, they'd start hiring AIG's former contracters/subcontractors the next week (month maybe) too.
P.S. One more thing I've noticed- I remember a lot of people being pro-Obama here because he promised raising taxes for the rich big companies.
Now everyone supports giving the same big rich companies something that could be described as an anti-tax.
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Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that’s what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the 10th man gets hit by a bus on the way into the bar.
The other 9 men walk past him bleeding on the floor and say "**** it. I never liked him anyway" and carry on to the bar. They're all confident that when they get to the bar they'll find another five guys a bit poorer than him to drink with them.
So the nine sat down and had beers without him. But no one else showed up that night. When it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!
And that, boys and girls, journalists and college professors, is how the bail outs work.
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Thought I'd put it in a language you'd understand.
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To everyone saying that government intervention = bad:
I live in Canada. Government regulations are a fact of life for all industry and trade here. And ya know what? That hasn't caused any of the big corporations which invest here to pack their bags and leave. Despite the current recession (thank you for that by the way, Subprime Loans) our economy's not doing as bad as America's.
Mixed economies for the win.
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Yeah but the average American school of thought:
Mixed economy = socialism
Socialism = Union of Soviet Socialist Republics
OR
Socialism = evil haughty liberal Europe
Thank you Cold War propaganda. Seriously, guys, it's reasons like these when you have private businesses making ****ing stupid decisions with money and loans that we need government to keep them in check and not **** us all over.
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There are more and better ways to stimulate the US economy. The first way is taxes; lower them and you encourage business and consumers to participate more fully in the economy. The second is government spending; many of these projects will need to be completed by contracts, but the issue is that the pork-barrel spending is much more than necessary and goes to the friends or the friends of the friends of our Senators and Congresspeople. Every company needs profit to survive, but these companies don't need 2/3 of their construction project to be nothing but profit. That's why I don't like these pork-barrel ear marks... they don't make sense when you can spend half as much and get exactly the same thing. Many of these defensive projects and construction projects (the most "popular" forms of government spending) make so that the USA continues to develop the bleeding edge in technology with our smartest and have everyone who's not "fortunate" (also known as lower class and lower-middle class) with a job if they want it.
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As we've seen, none of that matters untill banks start lending again. It's amazing, banks reckless lending started most of this and now their lack of lending is making it worse.
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I still think that this would have blown over and been a mild recession at worst if the media hadn't spent 6 months convincing everyone the world was going to end...
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Here's the proper version:
Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. The bartender says one day that he's going bankrupt and needs the 10 men to give him money, $50 each, so he can keep his business afloat. That is a bailout.
Let's say the people say 'No!'. The bar bankrupts and goes out of business, and the 10 men, along with all other customers go to different bars the next day. Within a week other local bars hire more employees to keep up with the greater amount of customers. That is free market.
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Why do you assume that all AIG employees would sit on their @$$es and do nothing for many months until another company takes AIG's place and rehires them?
It's not like they're incapable of working anywhere else. :p
Hell, many would probably leave the insurance industry for good and be happy about it.
But what are they going to do? The jobs market is already weak - you dump tens of thousands more people onto that all trained in the same industry and the vast majority of them just aren't going to find another job
Ask yourself, for example, what would have happened to all the clients - big corporate clients - if AIG had folded and they'd not had public liability insurance, or workers medical insurance or whatever anymore. They'd ...
... go to someone else to buy insurance, and be back in business the next day. Hell, they'd start hiring AIG's former contracters/subcontractors the next week (month maybe) too.
It's the timeframe I have a problem with. AIG is an enormous company - the largest commercial and industrial insurer in america, according to wikipedia. It goes under, and you're looking at thousands of companies all trying to get new insurance elsewhere all at the same time. Companies don't move quickly enough to deal witht hat in any kind of reasonable timeframe. And even if AIG simply fractured up and was onsold to other companies, you're still looking at a timeline in months before people get rehired by those other companies to deal with the new accounts. Business moves slowly when big changes are involved, and that slow pace would hurt a lot of people.
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Here's the proper version:
Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. The bartender says one day that he's going bankrupt and needs the 10 men to give him money, $50 each, so he can keep his business afloat. That is a bailout.
Let's say the people say 'No!'. The bar bankrupts and goes out of business, and the 10 men, along with all other customers go to different bars the next day. Within a week other local bars hire more employees to keep up with the greater amount of customers. That is free market.
A bar? A bar that probably has, what, 200 regular customers, and twenty odd employees? Most of whom are probably part time or casual? A bar that doesn't deal with any transactions more complex than simple sales and a few contracts with breweries, liquor suppliers etc.? Yes, in that example, you're right, the free market will deal with the bar and life for most people will go on as before. That's why governments don't bail out bars, or any small businesses for that matter except farms. But that doesn't scale up, not with numbers and definitely not with the complexity of the businesses involved.
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You missed my point. You've complained in the past about how high taxes drive businesses away yet you don't seem to understand that big businesses going bust does much the same thing.
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I get the point about big companies failing in an economic crisis causing more problems, as shown days ago in my previous posts. I don't agree with ideas such as people losing one job and being incapable of working elsewhere (even if for less cash), and in case you've missed it, I posted this thingy here:
http://conservativecolloquium.wordpress.com/2008/03/21/a-beer-story-tax-cuts-for-the-wealthy/
which describes how tax breaks work in the US, using a bar and 10 people as an example. I simply used the same metaphore to write about insurance companies, bailouts and the free market. Since it's a metaphore, it gives the general idea (mechanism), but not the details.
You missed my point. You've complained in the past about how high taxes drive businesses away yet you don't seem to understand that big businesses going bust does much the same thing.
http://en.wikipedia.org/wiki/Bankruptcy_in_the_United_States#Largest_Bankruptcy
There were huge bankruptcies in US history, and while they did cause problems, none actually drove big businesses out of the US.
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If AIG goes out of business do you really expect that only American companies are going to pick up the business they currently have?
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If AIG goes out of business do you really expect that only American companies are going to pick up the business they currently have?
No, I expect more companies to take it's place, which will be good for the customers in the long run (just like when foreign car makers appeared on the US market). BTW- where'd you figure out I'd be thinking that?
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Because you still haven't correlated corporations leaving America due to tax being a bad thing with corporations going bust and being replaced by companies not from America.
Let me put it more simply then. If companies leaving America for tax reasons = bad. Then how does companies not from America taking large portions of your business != bad?
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um, because they are otherwise good companies? you know, they sell stuff.
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What's that got to do with anything?
If you don't know what I'm on about take a look at this thread (http://www.hard-light.net/forums/index.php/topic,61567.0.html). Bengal Tiger repeatedly claimed that large corporations moving out of America (And therefore not paying tax in America) was a bad thing. I fail to see how he can claim that large companies going bust and being partially replaced by companies not based in America isn't the same thing by a different route.
I want him to explain which of his two arguments was wrong or how he can reconcile the two.
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oh, okay.